A new plan by the U.S. Treasury and the Federal Reserve to improve market conditions for asset-backed securities – including those composed of SBA-backed small business loans – is welcome news to credit-hungry small businesses across the country.The plan establishes the Term Asset-Backed Securities Loan Facility, or TALF, to breathe new life into a secondary market that essentially ground to a halt in October. The TALF would make loans to investors who purchase asset-backed securities made up of small business loans guaranteed by the SBA.
About $4 billion in securities backed by SBA-guaranteed loans are bought and sold in the secondary market each year, with the total outstanding amounting to about $15 billion. At present, a share of the current year’s volume of loans securitized by lenders – estimated at up to $3 billion – is essentially frozen. The resulting lack of liquidity hampers the ability of some of SBA’s lending partners to make new SBA-backed loans.
The loans that investors will receive from TALF through this new action can be used to purchase these securities from brokers.
In other words: This new plan will encourage thousands of banks to lend more money to small business owners and entrepreneurs like me and you - even during a bad economy.
Source: www.SBA.gov/news
I just read on slate the other day an article about how the small business administration has just undermined its program to lend to minority-owned businesses, here's the link:
ReplyDeletehttp://bizbox.slate.com/blog/2008/12/women_minority_lending_program.php