Small Business Funds - Drying Up Again?

When congress passed the recovery act in 2009, it allowed the SBA to back bank loans and insured them up to 90% in the event of a default. Since that program was instituted, the SBA backed over 12,000 loans worth about $3 Million. The program obviously worked, and in fact, was re-instituted several times after the initial allotted money ran out. The program once again ran out of money and stopped May 31.

Now, as the country is on the verge of a double-dip recession, reports show that the number of business loans fell dramatically in June. If the country does fall into another recession, and banks continue to be stingy on lending - where does that leave the small business owner in need of funding?

With the possibility of another recession looming on the horizon this is certainly not news that anyone wants to hear. Fortunately, it appears that help may be on the way in some form of government backed program.

There is currently legislature in front of congress that will extend the SBA's program through the end of December. Just a few days ago the House of Representatives passed a small business funding bill - worth $30 billion - that would allow banks will less than $10 billion in assets to invest in small businesses. If the bill passes it would reward lenders with lower dividend rates paid to the government.

There are even more creative lending options out there such as JP Morgan's offer to cut the interest rate by half of a percent on a business line of credit for each new hire the business makes. Not only is the lower interest rate an incentive to the business owner, but it could also help the unemployment rate.

If you find yourself in a position that requires a business loan, do your research and find a program that will benefit you the most. The programs are out there - you just have to look.