Tuesday, February 03, 2009

Kiss and Say Goodbye

I'm gonna miss you, it's no lie.
Let's just kiss and say goodbye.
"The Manhattans"

The SBA said losses from loans made through its lending programs more than doubled in 2008 reaching nearly $1.3 billion according to The Wall Street Journal (subscription required).

Potentially adding fuel to the fire, the economic stimulus bill making its way through Congress includes $735 million for the SBA to stimulate lending to small businesses.

The provisions for the SBA stimulus include larger loan limits, an increase in the government guarantee percentage, a reduction in borrower paid guarantee fees and possible direct lending by the SBA if all other lenders decline the loan.

No word on whether the SBA will instruct lenders to relax their underwriting criteria and give loans to any borrower with a pulse. Isn't that how we got into this predicament in the first place?

I suppose some will say this bailout of Main Street is no worse than a bailout of Wall Street. I just hope that some judgment is used before piling more debt on borrowers who can't repay.

If not, who wants to pucker up first and kiss that stimulus money "goodbye"?

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Tags : SBA , 7a loan , 504 loan , small business , SBA loan

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