Currently, there is a bill in congress - H.R.5297 (the “Jobs 3 Bill”) - that proposes a $30 billion package for community banks to use for small business loans. This bill reinstates some of the benefits that helped banks make loans during the time the American Recovery and Reinvestment Act (ARRA) was in effect, and adds additional provisions that will help small business owners moving forward.
This bill will help banks like Ridgestone support small businesses in the coming months. We all know that small businesses are major contributors to our economy and that the current economic conditions have made survival and growth difficult. This bill will be a particular help to manufacturers, who provide many jobs for people in the Midwest.
There are two reasons the passage of this bill is so important:
- The bill will enable banks to help borrowers with higher financing needs by raising the loan limit size from $2 million to $5 million.
- The bill will reinstate the 90% guarantee on loans by the SBA, which will make it easier for lenders to be comfortable making loans
Additionally, this bill increase the maximum SBA size limits for an eligible business to allow larger businesses to qualify for SBA loans. This increase will be permanent and will allow businesses with a (tangible) net worth of $15 million (up from $8.5MM) and a 2-year average (net) income of $5 million (currently $3MM) to qualify for SBA loans. Also, Energy efficient or Green 504 loans will increase to $5.5 million as will 504 loans for “small manufacturers.”
If you agree with us, be sure to contact your representatives to let them know you believe this $30 billion package should pass. Small businesses need financing to grow and banks like Ridgestone need the ability to provide these very important government-guaranteed loans.
Posted:
8/23/2010 12:57:19 PM by
Tom Abraham | with
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Some business owners are becoming more optimistic about the future. If you are one of them, it is important to do more than just think about the future, you also need to prepare for it.
Challenge yourself to be ready financially for the rebound. By asking yourself these three questions, you can help your business be positioned to take advantage of opportunities when they are presented.
Q: Now that we appear to have survived; what can we do about working capital as the business rebounds because the line of credit was used to support losses?
A: It may be possible to work with a banker to restructure your debt to obtain access to additional working capital or your banker may have other financial sources such as factoring companies who buy receivables.
Q: Now that my numbers are looking better, should I consider refinancing my debt? Is there a better loan structure?
A: Any time the financial performance of your business changes is the right time to contact your banker. At Ridgestone, we specialize in government-guaranteed lending, which often allows us to find terms and structures that provide lower payments and greater access to working capital. Many owners have learned “a low fixed interest rate” isn’t the most important thing when discussing financing.
Q: What have I learned about business that I didn’t know before?
A: Hopefully, you have learned a great deal about efficiencies, budgeting and profit margins. Maybe the company has implemented lean principals, either formally or by chance. Unfortunately, you have probably also learned about cost-cutting and layoffs and while painful to all, this economic situation may help you become a better business owner. Maybe you’ve learned that there is equipment that may increase efficiencies and now is the time to invest. If so, be sure to talk with your banker about your ideas so you can proactively make financial decisions.
Posted:
8/3/2010 4:37:23 PM by
Jessie Hagen | with
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It has never been more crucial for small businesses to work hard, smart and efficient in order to succeed. Today’s successful small business owner also needs to make sure their bank is their partner in their business instead of just a service provider.
Community banks are often the way to go when a small business is looking for a bank, whether it be a new small business or a seasoned small business looking for a banking change. Ask these questions to your potential banker and your decision to change to a community bank may be easier than you think.
1) Where are the bank’s decisions made? Is it at a corporate office across the country or at the local branch, where they have their finger on the heartbeat of the community? Community banks decide what is good for their customers at the branch where they service their clients. What is good for the folks who live around the corporate office probably isn’t the same where you are looking to grow your small business.
2) Who is handling your account? Experienced bankers are essential to make a bank run smoothly. While there will always be new people breaking into the banking world, at community banks experienced bankers handle the small business accounts, while at most large banks it’s the rookie banker taking on the smaller clients. Community bankers not only have the banking knowledge, they have been living in your community for years. It makes a difference, be sure to ask.
3) Every small business is different, with diverse banking needs, yours is no exception. Be sure to ask about the variety of customized products your potential bank offers. If they don’t have a certain product that fits your small business needs, are they willing to customize one of their products that will? Just because you don’t fit neatly into one of their offerings doesn’t mean that they can’t create something that will work for you.
4) Are they putting you first or are they trying to sell you on different products each time you talk with them? Do they understand your business and offer you products that fit, or do they push the “product of the month?”
5) Make sure your bank would make a good “rainy day lender”. When you sign on with a bank, you may have no interest in a loan. But as we all know things in business move fast - opportunities rise and are gone in a flash. A community bank is more apt to realize a good thing within your community and work with you to make it happen, and make it happen quickly before it’s gone.
Posted:
7/20/2010 9:08:02 AM by
Thomas Huffman | with
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The past two years have been a time of great change for most business owners (and most banks). Ridgestone Bank is no exception. Our focus on SBA and USDA lending has allowed us to become the number one USDA lender for fiscal year 2009 and the 44th largest SBA 7(a) lender in the United States.
Because of our success, we have realized that there is a great need for advice in our area of expertise – government guaranteed lending. That is why we are starting this blog. Ridgestone bankers will contribute information on issues related to business growth and financial stability, government-guaranteed lending, as well as news from and about Ridgestone Bank. We know there are many business owners who want to know more about managing their finances and their debt and we are here to help.
We look forward to sharing our insights with you and hope you find them valuable. What do you want to know about SBA or USDA loans? Let us know. You just might see your question in a future blog post.
Posted:
6/28/2010 2:57:15 PM by
Bruce Lammers | with
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