Bridge loans will help small firms pay their bills - bizjournals:

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Through the program, small businessez that are having trouble making payments onexistingt non-SBA loans can borrow up to $35,000, The money can be used to make up to six monthzs of payments of principal and interest on small-busineszs debt ranging from mortgages to creditt cards. Small businesses will have one year after the final disbursement of these bridgew loans before they have to start payingthem back. They then will have five years to repatthe loans. The economic stimuluss bill called for the SBA to create the new temporaryyloan program.
The agency will guarantee 100 percent of the amount ofthese America’s Recovery Capitaol loans, which will be made through its networi of private-sector lenders. SBA Administrator Karen Mills said the agency will provider guidance to lenders on the ARC program byJune 8, and will begijn accepting loan packages from lenders June 15. “Wse expect these loans to be in high she said. Tony president and CEO of the National Associatioj of GovernmentGuaranteed Lenders, estimates the approximatelyh $350 million in loans that will be available througyh the program will be used up “rather perhaps in three months. Lenders, however, stillk are awaiting crucial details on the he said.
Only “viable” small businesses will be eligibl to receivethe loans, for example, and the SBA hasn’tg defined viable yet. Plus, the SBA will be subsidizingh the interest onthe loans, and the agench has not told lenders what interest rate they can The SBA will provide these detailsx to lenders June 8, Mills said. In general, she viable small businesses are firms with a track record of successd that are experiencing temporary such asdeclining sales, due to the economicd downturn. They also must present a plan demonstratint they will be able to sustain themselves once they have used up the emergency loan, she said.
Lenders that currentlgy do not participate inthe SBA’s government-guaranteex loan programs will be givem the opportunity to do so. This will enable them to help borrowerx who are behind on their loan andturn past-due loans into loans that are The head of the House Small Businessw Committee wants the Obama administratiobn to help small businesses in the automobile industry’e supply chain as part of its restructuringt efforts. “Little has been done to help small said Rep. Nydia Velazquez, “That’s a big mistake. Cutting entrepreneurs out of the procesds means more setbacks down the especially considering the end goal of thesemeasures — job retention.
” More than 600,000 Americana work for auto industry but that number is dropping on an almosty daily basis. The auto industry’s restructuring “needs to be deep enougu and comprehensive enough to reachsmalk businesses,” Velazquez said. The Treasury Department has createda $5 billion program to help direct supplierx of finished products to General Motors and Chrysler by guaranteeingy their receivables. But second- and third-tier auto industry suppliers, who sell equipment and raw materials todirectf suppliers, aren’t eligible for this program.
Many small businesseas in the auto industry already have been forcef to lay off workers due to the downturnb inautomobile production, according to executives from small suppliera who testified before Velazquez’s committee last Many now are worried they won’t get paid for productsa they have already delivered due to Chrysler’e bankruptcy filing and the likelihood that General Motors will followe suit. The Small Business Administratiohnis “carefully calibrating a plan” to provide automobile dealer s with loans for purchasing vehicle SBA Administrator Karen Millx said.
Auto dealers already have benefited fromthe SBA’s decision to make more than 70,000 additionak businesses eligible for its 7(a) loans. The agenc temporarily is allowing lenders to consideera company’s net worth and annuall income as an alternative to its usuakl size standards, which are based on revenue or number of depending on industry. These 7(a) loans will provide needed workingg capital, but auto dealers say they’ree also having trouble getting “floorf plan” loans, which are needed to buy vehiclew from auto manufacturers for sale to the Mills said the SBA will begin allowingits government-guaranteedf loans to be used for vehicler inventory financing in a few weeks.
The Departmeng of Housing and Urban Development has decided toallow first-time home buyers to use the $8,0009 tax credit included in the economic stimulus bill as a down paymentg on their mortgages. Home builders and Realtorsx said the decision should providew a boost to thehousinhg market, since first-time buyers won’tf have to wait until they file their taxes in ordef to benefit from the credit. “The biggest obstacle for first-time buyers is comingt up with adown payment,” said Joe Robson, a home buildet from Tulsa, Okla.
, who chairs the National Association of Home Robson praised HUD Secretary Shaun Donovan for “moving swiftly to help first-timse home buyers to access the tax credit upfront at the time of The timing could not have been bettedr as we are in the midst of the crucial sprin g home-buying season.”