ARTICLE FROM VETREPRENEUR MAGZINE (November/December 2016 Issue, p. 94)
(Distributed and shared during by National Veteran Owned Business Association at the National Veteran Small Business Engagement event, Minneapolis, Minn.. Nov. 04, 2016 and at the NVOBA Vetrepreneur of the Year Award Ceremony)
Special Report: its Effects on vetrepreneurs and SBA loan fee waiver for small businesses
From WOODY WOLLESEN
Earlier this season, the U.S Small Business Administration implemented a new measure aimed at helping improve accessibility for veteran small business loans. SBA Express loans of $150,001 to $350,000 possess an guaranty fee of 3 percent. The new step removes all those veteran borrower upfront fees. https://www.sba.gov/offices/district/pa/pittsburgh/resources/sba-business-loan-information-veterans
As well beneath the Veterans Advantage plan the upfront guaranty fee for 7(a) loans (aside from SBA Express) of $150,001 around and including $5,000,000 for qualified veteran small businesses has been reduced by 50% https://www.sba.gov/sites/default/files/lender_notices/5000-1354.pdf
The most important question for vetrepreneurs is how does it impact their access to funding?
Upfront it should also be emphasized that any relief in costs for vital veteran business financing or capital is a welcome and applauded change. Helping and supporting veterans should be a federal priority.
GOOD, BAD OR INDIFFERENT?
First a few caveats for circumstance should be understood.
* It must be emphasized that the SBA is not a direct creditor in almost any kind to little business (veteran or differently). SBA programs simply offer credit enhancements or loan guarantees. . Any and all lead lending by definition could only happen through or by commercial banks or other commercial lending institutions.
* As such all loan choices for any veteran borrower will always lie together together with these commercial banks or other lending institutions. SBA does not have any immediate input or control at respecting those commercial creditor decisions. Whether any veteran enterprise borrower is or is not qualified for a loan is based solely with the creditor.
* Whether any SBA lending application might or might not be used by any commercial lending firm is a singular decision by that thing. In the lending institution side of the equation the invariable questions will continually be
* whether the program raises bank “quality lending” opportunities;
* actually matches the institution’s lending culture or market section; and
* internal costs, both financial and human resource, to integrate the SBA credit improvement plan(s)?
* Note, that although flow through fees to seasoned borrow candidates might in some fashion indirectly consider in the balance from any of the aforementioned factors, there is no cost impact to the bank (SBA fees are 100% borrower related).
Given so many elements in play at any given point or time period within US small business lending operations, qualitatively quantifying economic elasticity between SBA experienced assurance lending prices and increased veteran lending are a highly tough undertaking (even assuming cost advantage made a sensible job).
It is suggested that even without a comprehensive study the logical answer would be from the resounding negative. Why?
In the actual universe of banking/lending and relevant inter connections with government programs that might impact or influence, there is no such thing as a “lone silver bullet”. Industrial banking/lending is in fact a highly intricate and interlaced system of variable economic factors with innumerable types of lenders. All those factors can and typically conduct impact veteran borrower access to funding.
In case a real increase veteran access to funding was to be the attention, it would require a lot more involved and complex changes inside the federal lending systems. An alteration in SBA program prices for veterans, though welcome and useful, wouldn’t in itself raise veteran access to funding.
(Writer Profile: Woodrow D. Wollesen, recognized national small business financing expert, military veteran; former US SBA Small Business Financing Champion, (eight years) Board Member, Executive Officer, Instructor with the esteemed National Women’s Business Center, Washington, DC; NWBC 2005 Man of the Year, founder/chairman of Operation Veteran Empowerment (Ultimate Financing Guide — the encyclopedia of business financing) Watch http://www.operationveteranempowerment.com/ http://www.opvetempower.com ; see also more extensive background profile at http://www.ultimatefinancingguide.com/about-the-author/;
Have a lucky day
Woodrow D. Wollesen
President, Execunet, Inc..
email@example.com / 770-435-0880
Nationally Recognized Business Financing Expert, Taekwondo 4th Dan/Master, Two Time National Champion, National Record Holder
Founder/Chairman — Ultimate Financing Guide/ Operation Veteran Empowerment
Additionally additional background profile: http://www.ultimatefinancingguide.com/about-the-author/
Operation Veteran Empowerment