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Recent Changes SBA Loans



Much has changed in the last few months with SBA Commercial loans.  For example, the SOP or the Standard Operating Procedural book was recently rewritten and reduced by several hundreds of pages.  This was done in an effort to simplify the underwriting standards.  But this is just the beginning. 

President Obama's Stimulus Package has created some very interesting developments, including waiving of SBA fees on both the SBA 504 loan and on SBA loans.   Also, they temporily raised the guarnteed portion on 7a from 75% to 90% to get banks more interested in funding additional loan requests, as this should more fully protect banks interests.

SBA 7a Thawing Markets

With regards to SBA 7a loans, most experts agree that the main culprit in explaining why the program is down 57% in 2008 is the froozen secondary market.  Banks have not been able to sell the debt off and have been forced to hold onto loans, which is something that most banks do not want to or can not do.  Borrowers have been reduced to just the banks and lenders that have the appetite and ability to hold onto the debt long term, ie portifolio lenders.  Because of this, the majority of banks have just pulled out, until the secondary market comes back.  

As a solution, Obama has decided to buy $50 Billion of loans that are froozen on the secondary market.  Many industry experts have been pleasantly surprised by this strategy as it should have an immediate and powerful affect.  The $50 billion is scheduled to be spent by the end of March.     

We will keep our clients informed  as this develps.

 

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