Although most of us cant imagine it, but it is possible to have tons of money to lend out, but few to lend it to. This is the current situation in which, Small Business Administration District director of San Diego, Ruben Garcia , is stuck in.
He is currently looking to “sell” small business loans to California’s entrepreneurs. Such low-cost loans are now available through SBA in the 2009 budget.
California’s Hispanic Chamber of Commerce had its its annual convention in San Diego, where Garcia spoke on a panel.
Around 500 participants had registered for the four-day conference held at the U.S. Grant Hotel, including appearances by Gov. Arnold Schwarzenegger, Sen. Dianne Feinstein, and state controller John Chiang.
The panel on Friday had the topic of “California’s economic recovery and business opportunities.” It was targeted at small business owners, who make up a majority of the state’s businesses. There are many who have been harmed badly by the recession.
Garcia gave a breakdown of the federal stimulus money, that the SBA has received for fiscal 2009, starting June 15, under the American Recovery and Capital program.
According to the plan, the $730 million in funds, that the SBA received nationally includes:
— $375 million for temporary fee reductions on SBA loans. Origination and processing fees is included in it. According to Garcia, about two dozen businesses have applied for these fee reductions, in San Diego. It is possible to save up to $40,000, in case of some loans. Such savings can be used by a company to invest in the growth of their business.
— $255 million are allocated for a new loan program which is designed to help small businesses pay for existing debt. This means that the government pays for business-related loans up to six months past due and 12 months going forward.
— $30 million have been allocated for microloans. These are loans of less than $50,000 each, used to grow a business. However, many microloan applicants do not qualify for loans with traditional banks and institutions.
Although the existing loans should be for business-related expenses, but can pay for credit cards, unsecured loans, mortgages and other secured loans. This will mean that you can relax while the government pays your bills for 18 months, but you’re going to be working hard on your business, according to Garcia.
Several hundred businesses have applied so far in San Diego. But as the approval process takes 30 days, only a few had been approved to date, with more yet to come. The government has guaranteed these loans 100 percent, so there is no risk to banks doing the lending.
Although many businesses have been hurt due to the current economic recession, the SBA is willing to help business owners. The greatest obstacle for the programs, said Garcia, was simply getting the word out to business owners.
