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Psst! Need Funding?

(April 2011) posted on Tue Feb 22, 2011

A few suggestions for the average, financially strapped print provider.

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By Mark E. Battersby

* A Small Business Lending Fund to provide up to $30 billion in capital to financially sound small banks with less than $10 billion in assets, to encourage them to lend money to small businesses. As an incentive, those banks that increase lending to small business by 10 percent over the previous year will pay as little as one percent on the capital they acquire from the fund.
* Any digital printing businesses considering Small Business Administration loans stand to benefit from the extension of provisions that amped up SBA lending guarantee programs and fee reductions that recently expired. In addition, the bill increases the maximum loan size for the SBA's 7(a), 504, and microloan programs. The 7(a) and 504 loan program maximums would bump from $2 million to $5 million, and the microloans would increase from $35,000 to $50,000. Loans made under the SBA Express program would temporarily increase from $300,000 to $1 million. Also included is a temporary allowance for small-business owners to use 504 loans to finance certain mortgages to avoid foreclosure.

The SBA’s primary and most flexible 7(a) loan program is designed for both start-up and existing small businesses, and involves government-backed guarantees for amounts loaned for general business purposes. Last spring, the Treasury and the SBA announced a joint initiative to make direct purchases of securities backed by 7(a) loans on the secondary market in the hope of freeing capital and encouraging more small-business financing.

The SBA’s CDC/504 loan program provides long-term, fixed-rate financing to acquire fixed assets (such as real estate and equipment) for expansion or modernization. It’s ideal for small print shops requiring “brick and mortar” financing. Rather than commercial lending institutions, 504 loans are delivered via CDCs (certified development companies) – private, non-profit corporations set up to contribute to the economic development of their communities.

The SBA also has a unique program to provide small (up to $30,000), short-term “microloans” for working capital for the purchase of inventory, supplies, furniture, fixtures, machinery, and/or equipment. Ideal for those needing small-scale financing and technical assistance, the SBA microloan is delivered through specially designated intermediary lenders (non-profit organizations with experience in lending and technical assistance).