SBA Loans are Open Again!!

As Melanie Lindner writes in Forbes, the SBA loan market is being freed up by the Obama administration's injection of $15 billion for purchases in the secondary market. This market works like the mortgage market and has been frozen for several months now. By freeing this secondary market banks will have new capacity to originate new loans.

Even better for borrowers, through the end of 2009 the SBA is waving origination fees (not sure about the bankers, I'm sure they'll still want their fees), and upping the percentage the government guarantees from 75% to 90%, making these loans much more attractive to lenders.

So it's now time to go to your banker and ask, what amount and terms can I get now to sustain and grow my business?

Clarity is not Enough

As usual, the Bush folks don't know what to do with what they have been granted by Congress (see Wars Afghanistan, Relations Rest of World, etc.). As Fair Game columnist Gretchen Morgenson writes today, what the administration is doing with the Troubled Asset Relief Program is not working. They have invested several hundred billion dollars into banks and others too big to fail. They are certainly not doing what the title of the program says, or maybe they are, that is giving relief to the banks and others who hold the bad mortgage assets. They are really not giving relief to the engine of the economy, that is the bank's customers - individual consumers (who are losing their sources of income) and companies (losing customers) - the ones who need the most help and who generate more than 87% of GDP (individuals via consumption, companies via direct investment).

It now looks like we will have to wait for Obama's guys to use the money appropriately. Would that be to bail out the auto companies? Not so fast, they might be better going through bankruptcy - see Steel companies, US for a surviving example.

What proof do the markets display to us about what will work? On the downside, the decline in the markets since the election have been serious, and are primarily due to the uncertain actions by the existing folks. The uptick this past Friday was a reaction to the guy Obama will appoint as the new Treasury Secretary. Certainty is good, certainty about an experienced dude is very good. Still, even including Friday the equity market is down 45% so far in 2008. For a full year it hasn't been down that much since 1931. We'll see what the remainder of the year holds, but from the current actors don't expect much.