SBA Lending News continued
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CDCs, SBA Get it Right in Refis -- says the OIG!
When Congress passed stimulus for SBA 7(a) and 504 loans, money was also appropriated to the Inspector General to keep tabs on SBA and the industry.
The OIG was concerned that CDCs did not "exercise due diligence" in originating and closing Recovery Act 504 loans due to temporary fee eliminations and the CDCs being reimbursed for fees normally paid by borrowers.
Everyone did their jobs concluded the OIG in their examination of the first ten SBA 504 refis on the books, and 50 additional 504 loans.
They had an issue with a couple of loans, but issued the finding that "504 Program Recovery Act Loans were Generally Originated and Closed in Accordance with SBA's Policies and Procedures." . . .
Revision to SOP 50 10 5(E) -- Areas that may be Included as Rentable Property
Under SBA regulations, a Borrower may lease up to 49% of the Rentable Property when the
property being financed is an existing building if the Borrower permanently occupies and uses no
less than 51% of the Rentable Property. In the case of new construction, a Borrower may lease
up to 20% of the Rentable Property permanently if the Borrower uses no less than 60% of the
Rentable Property and plans to permanently occupy and use some of the remaining space within
three years and permanently occupy and use the remaining space not permanently leased within
ten years. (13 CFR §§120.131 and 120.870) SBA has historically excluded all exterior space in
such calculations. Based upon reviews of several recent examples, however, SBA has
determined that some exterior space may be actively used in the operation of certain types of
businesses and, therefore, should be permitted to be included in the calculation of the total square
footage of Rentable Property for such businesses. . . .
"Now is a Great Time to Sell, Restaurant Valuations are Very Strong"
This four minute video will give you an excellent restaurant industry outlook by CIT's Bob Bielinski. He discusses financing options, franchisee financing availability, restaurant valuations and the future outlook. It's well worth the view. . . .
Wells Fargo Selected as Central Servicing Agent for SBA 504 Loan Program
Wells Fargo has been selected by the U.S. Small Business Administration (SBA) to serve as the new Central Servicing Agent for its 503/504 loan program for the next five years. This program, approximately $23.6 billion in size, includes more than 57,000 active small business loans and grows by approximately 7,000 new loans each year. Wells Fargo, in a joint business relationship with PwC US, will administer the loans and is creating a dedicated team located in Columbia, Maryland that will report to Brian Bartlett, head of Corporate Trust Services at Wells Fargo. . . .
The Biggest Banks Tell Us a Little More About Their Small-Business Lending
Getting capital into the hands of small-business owners and entrepreneurs at affordable prices is a critical issue for our economic recovery. And that's why it is important, when the largest banks in our country and the S.B.A. administrator make an announcement, that we understand what it means. I am happy to report that the Financial Services Roundtable, an organization that represents those 13 big banks, provided a statement in response to my post. We've decided to share the full statement, because we feel it provides some important clarification (while also raising some additional questions). . . .
What the SBA's Future Holds: Romney vs. President Obama
Our friend Cat Clifford from Entrepreneur.com asks the question: What will the SBA be like come January? The SBA would probably continue to operate as it has if President Obama is re-elected, she says, but the larger question is what the SBA would look like if GOP challenger Mitt Romney is elected. . . .
The Venture Capitalist Secret: Three Out of Four Start-Ups Fail
Overall, nonventure-backed companies fail more than venture-backed companies in the first four years of existence. But, there is new evidence that venture-backed start-ups fail at far higher numbers than the rate the industry usually cites, the Wall Street Journal is reporting. . . .
A "Feel Good" Story on How 504 Works to Strengthen Main Street
The other side of the coin on plunging commercial real estate prices, is entrepreneurs today are able to comfortably purchase the real estate to not only stabilize their business, but strengthen their personal long-term financial well-being.
Says an automotive business owner, "The reason why I went ahead and bit the bullet was the opportunity in the market. For the price I paid for the place, I was able to get frontage and still have refurbishing money." . . .
Banker by Day, NFL Replacement Ref by Night
The official at the center of perhaps the most controversial call of the season is in fact a vice president for small-business banking at B of A in California.
Lance Easley has worked at the bank since June 2011, according to his LinkedIn profile, and was a business banking specialist at Wells Fargo for nearly three years prior to that. A source at B of A confirmed Easley's title, but the company declined to comment further.
Easley was standing in the end zone during the final seconds of the Monday Night Football matchup between the Seattle Seahawks and Green Bay Packers. . . .
Fuzzy PR math? Or do we have Real Small Business Loan Growth?
Our New York Times blogger friend Ami Kassar continues to hold SBA Administrator Karen Mills and the 13 largest banks accountable for their commitment they made to small business lending last year -- a $20 billion increase over the following three years.
With their public pronouncements of a glossy $11 billion increase to Main Street alone this year, Ami asks the simple question of exactly what type math is being used to support the stats. . . .
Banks to focus more on small business loans
Banks are expected to focus more on the SME segment next year because new Basel requirements will constrain their ability to lend to corporations.
To sustain high returns, banks have to build up their SME port-folio, while the urbanisation trend gives banks more opportunities to extend credit to SMEs, Kevalin Wangpichayasuk, head of money and banking research at Kasikorn Research Centre, said last week. . . .
U.K. to Set Up Business Bank
The U.K. government is investing £1 billion ($1.62 billion) to set up a business bank that it hopes will eventually support up to £10 billion in lending for small and medium-size companies, Business Secretary Vince Cable said on Monday.
The government also aims to attract more than £1 billion from the private sector to help tackle what it sees as the long-standing problem of a lack of credit for smaller companies. The total investment is aimed at guaranteeing and generating five times as much actual lending by small banks and alternative lenders, aides said. The government will provide details of its contribution in its Autumn statement on Dec. 5. . . .
Mug Shot Monday, or Why Can't Auto Loan Notes Return 20%?
If the results weren't so devasting -- $90 million lost to investors -- a 67 year old woman getting 30 years for the scheme, this Forbes article would be having you laughing all through it because of the braziness of the con artists, and the willingness of investors to get in on the amazing returns gravy train.
The fraud had everything. Investor greed. Fraudster moxy. And with just enough simplicity, it SEEMED possible that you could really get a 15-20% return by being part of this exclusive, invitation, members only investment club. Why, what could go possibly wrong?
Very well written Mr. Singer. . . .
Fraud Friday -- Trust but Verify Edition
We have two stories for your review today. Both involve borrower fraud, and both involve the lender failing to verify what the borrower was doing with loan proceeds money.
The first story invoices a $4 million fraud where the lender advanced 12 draws for an 85 unit construction project in Alaska. Each draw was only supported by a "one page construction loan draw statement itemizing work that he said had been completed."
Our second story is for a smaller amount, $256,000 by a Wisconsin car dealer who sold the cars without paying off the line.
Each face the obligatory 30 years in jail and a$1 million fine. . . .
Rocky Point Resolution at Finish Line for SBA
Boosting hopes that all of the former Rocky Point Amusement Park will be saved for public use, Governor Lincoln Chafee announced yesterday that the Small Business Administration has accepted the state's offer of $9.65 million to buy the remaining 82 acres of Rocky Point Park. The $9.65 million would be paid from a $10 million bond approved by voters in 2010, and the land would be turned into a state park. . . .
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