Business and Industry Loans, B and I Loans in a State Of Confusion

Though we are seeing some real signs of stabilization within the commercial mortgage business, the USDA’s B and I program seems to be in a complete state of confusion. Business owners and investors are warned to be very careful with depending on the B and I loans as the recently announced that they have “run out of money”.

Though this maybe overly dramatic, it is basically the case. No one knows when capital that has been allocated to the USDA will be released. Could be 3 months, could be a 6 months… Most borrowers cannot and should not put up with this level of uncertainty, mismanagement and lack of leadership by our fearless politicians.

B and I Loans Decline

Borrowers should instead give serious consideration to other sources of capital. The most obvious is the SBA commercial loan programs which seem to have regained their footing and are becoming once again the reliable source of capital that they were created to be.

Some of the benefits to the SBA include 90% financing (vs. 80% with the USDA), fixed rates (B and I are almost always floating), and much lower fees. Most importantly however, is that the SBA 7a and the SBA 504 loan are still funding… The 504 program has stood up to the credit crisis well, and the 7a looks to have “rounded” the corner due to the Stimulus Package, and that President Obama has allocated $50 Billion to buy this debt off of the frozen secondary market at the end of March.

Also, the SBA does not have the typical small town restrictions that many conventional sources do, i.e. minimum 50,000 town population. Borrowers should get out there, roll up their sleeves and find real options for their loan requests and not wait indefinitely until our leadership provides answers.

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Commercial Finance Advisors, Inc.

261 E Maple Rd
Birmingham, Michigan 48009