To help provide greater liquidity for credit unions and other lenders, the SBA plans to launch a secondary-market guarantee program.
Designed to also expand access to capital for small businesses, under the new program portions of eligible 504 first mortgages pooled by originators or broker dealers could be sold with an SBA guarantee to third-party investors in the secondary market. Lenders will retain at least 15% of each individual loan, pool originators will assume 5% of the risk, and the SBA will guarantee the remaining 80%.
To be eligible to be included in a pool, the first mortgage must be associated with a 504 loan disbursed on or after Feb. 17, 2009. According to the SBA, the program will be in place until Feb. 16, 2011, or until $3 billion in new pools are created, whichever occurs first.
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The SBA said it will begin accepting applications to become a pool originator from lenders and broker dealers immediately, and expects to be operational for the settlement of pools in about 60 days.
The 504 CDC program provides credit for the purchase of real estate and other fixed assets tied to a business' expansion. For details on the secondary market program, credit unions, can contact James Hammersley, SBA deputy assistant administrator for policy and strategic planning, at [email protected].
Right on its heels, the SBA said it is has also proposed changing its 8(a) business development program in a number of areas. The changes will affect joint ventures where 8(a) firms are required to perform a significant portion of the work to ensure that these companies are able to build capacity. The agency has also proposed providing more clarification on economic disadvantage as it relates to total assets, gross income, retirement accounts and a spouse of an 8(a) company owner in determining the owner's access to capital and credit.
Other proposed 8(a) changes include in the areas of the mentor-prot?g? program, ownership and control, tribally owned firms, and excessive withdrawals.
The 8(a) program is a nine-year business development program for small businesses that fit the SBA's criteria of being socially and economically disadvantaged. The program helps them develop their business and provides them with access to government contracting opportunities. specialized business training, counseling, marketing assistance and executive development.
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