Loosening Credit From SBA May Not Help

Before small businesses take advantage of the loosening credit market afforded by the SBA’s backing of secondary market loans, they should consider this: It may be not good for their business. At all, said Sam Thacker, financial adviser for AllBusiness.com. The Web site is a SMB portal with more than 5 million unique monthly visitors, the majority of whom are SMB owners.
“Nearly all SBA loans require a blanket lien on company assets,” said Thacker. “If the guaranteed portion of a loan is sold on the secondary market, small businesses will have to deal with two lenders when a loan modification is made as opposed to dealing with a lender who holds 100 percent of the loan.”
Thacker believes it is crucial for small business owners to avoid lenders who sell part of their loan off. However, many small business owners might still be turned down when applying for loans.
According to Thacker, SBA lenders will only offer loans to companies with two to three consecutive years of profitability, barring the majority of businesses that had a bad 2008 despite previous years of profitability.

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