The agency said goodwill is the difference between what a buyer pays for an existing business and the book or fair market value of the assets of the business. Goodwill is one of the riskiest assets that can be financed because it typically has no liquidation value in the event a loan defaults, the SBA said.
The guidance allows SBA loans to be used to finance goodwill but limits that financing to no more than half the loan amount, up to $250,000. Until the agency's new SBA's standard operating procedures were issued for its loan programs last year, the previous guidance for goodwill was that sellers should finance it when a business was sold. However, as lenders increasingly used SBA-guaranteed loans to finance business sales, the agency issued more specific guidance, which was due to take effect on March 1.
Lenders expressed concern that the goodwill limits would effectively stop business acquisitions at a time when many newly unemployed individuals are considering the purchase of a business. The SBA said it will use the next six months to study the types of transactions involving substantial goodwill and consider a revision of the current policy when the semiannual update of SOP 50 10 is published in September.
Grameen America Applies for
a Federal Credit Union Charter
By MICHELLE A. SAMAAD
With a recent mention on CNN and interest coming from states like California, Arkansas and Nebraska, the momentum for establishing more affiliates of microlending bank Grameen America continues to build.
Since meeting with credit union and bank representatives along with regulators and trade groups in North Carolina twice in February, Grameen America has applied for a federal credit union charter and is in the midst of raising the $2 million it will need to set up an affiliate in the Tar Heel state, said Vidar Jorgensen, president of the microlending bank.
"From a regulatory view, everyone has been helpful. The support from credit unions and banks has been very encouraging," Jorgensen said.
Grameen America has set its sites on establishing a presence in Fayetteville, N.C. In late February, Jorgensen and others met with officials from the Fayetteville-Cumberland County Chamber of Commerce and the Fayetteville State University Center for Entrepreneurship to coordinate fundraising efforts. Charlotte and Raleigh-Durham are other North Carolina cities the bank is hoping to set up shop, he added.
Jorgensen said the goal is to raise $2 million, which is set to come in the form of grants, loans and later, deposits, to provide the seed money needed to operate during the financial institution's first two years. Once that amount is raised, Grameen America can start issuing loans, he said.
Since its launch in January 2008, Grameen America has lent over $1.2 million and 99.5% of the loans have been repaid on time, according to the bank. The financial institution is a subsidiary of Bangladesh-based Grameen Bank, a microlending organization founded in 1983 by professor and 2006 Nobel Peace Prize winner Muhammad Yunus. While the Bangladesh bank has a banking license, Grameen Bank is in various stages of getting banking licenses in other countries where it has affiliates, Jorgensen said. Grameen Bank said it has 7.75 million borrowers, 2,541 branches worldwide and has disbursed $6.5 billion in loans.
During a March 17 CNN business news segment, Yunus was named one of several innovators noted for their efforts to help get capital moving to small businesses in the United States.
Jorgensen, who spoke to Credit Union Times while on a visit in Little Rock, Ark., said interest in setting up Grameen America branches has come from that state as well as California and Nebraska.
"Ultimately, we would like to be in all 50 states," Jorgensen said.
The $16 billion State Employees' Credit Union, Self-Help Federal Credit Union, the North Carolina Bankers Association, the North Carolina Commissioner of Banks and the North Carolina Administrator of Credit Unions have all expressed support for establishing a Grameen America branch.
AT&T Does a Yellow Page U-Turn,
Allows CU to Advertise Under 'Bank'
By JIM RUBENSTEIN
AT&T has apparently had second thoughts about getting too deep into the bank-credit union clash over what is banking and what isn't when it comes to the Yellow Pages.
Based on a Florida experience that surfaced last week, the telecom giant also has no apparent intent to offend its CU clientele by dropping them from "bank" listings in the future.
AT&T officials in Florida, as well as those in other offices in St. Louis and Dallas, were not talking for the record except to say that a refusal by AT&T to list the $425 million Kennedy Space Center FCU, Merritt Island, Fla., under both credit union and bank categories had been reversed.
"We're rather disappointed that AT&T would do this kind of thing right from the start," declared Janice Hollar, the CU's president/CEO, in commenting on AT&T's initial denial of the credit union's request to renew its 2009 ad in the Yellow Pages under the bank heading.
Two weeks ago, an AT&T sales rep in Melbourne, where AT&T Advertising Solutions division has a field office, told Hollar that Kennedy Space can no longer be listed under banks because of an apparent new policy based on CU mergers and changed industry conditions.
Following a flurry of e-mails between AT&T corporate executives and Hollar and shared by other Florida CUs, it was explained that the new policy on mergers relates to "different regions of AT&T having different rules." The Florida rule might need to be studied as well as "our entire internal policy" on bank-CU listings, wrote AT&T officials.
Hollar said she was told by one AT&T official that CU advertising in the Yellow Pages "is a very important to matter to them and that all credit unions matter to AT&T."
"We spend $41,000 in Yellow Pages advertising a year, but this episode and given the economy has caused us to think again," said Hollar.