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Thursday, October 22, 2009

Improvements to Commercial Real Estate Credit Markets

In March of this year, as part of the American Recovery & Reinvestment Act, fees on SBA 504 loans were cut out, and guarantees were increased to as much as 90%. That helped spur about $13 billion in new lending that had stopped lwhen the financial crisis began. The SBA 504 loan program provides long-term, fixed-rate financing to acquire fixed assets (such as real estate or equipment) for expansion or modernization. It is designed for small businesses requiring “brick and mortar” financing.

As part of its efforts to stimulate economic recovery, the Obama Administration announced on October 21st a new set of initiatives to help spur lending to small businesses. The initiatives will use the Troubled Asset Relief Program to lower the cost of capital for smaller banks and community development financial institutions that present plans to the Small Business Administration for increased lending through the SBA's flagship 504 program. It will also more than double the maximum size limit of some of its guaranteed loans to small business owners.

Specifically, the SBA plans to increase the maximum size of its 504 loans, used most typically for purchase of land, buildings, and equipment, to $5 million from their current size limit of $4 million. Another Administration official noted new initiatives will lower the rate at which banks can access capital—in some cases to as low as 2%, rather than the current 5% rate.

2:37 pm pdt 

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"Carpe diem" (Horace, Rome 65 BC - 8 BC)
Santorini, Greece
"Life is an adventure"

Climbing to 11,500' elevation Meysan Lake
Climbing to 11,500' elevation "Meysan Lake"
Camp Lake at 11,200 feet elevation
"Camp Lake" at 11,200 feet elevation
Setting up camp at "Camp Lake"
Setting up camp at "Camp Lake"
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