Small business owners rejoice: It looks like getting a loan from the Small Business Administration may soon be within anyone's reach.
The SBA offers loans to small business owners as an alternative to bank loans and other financing options. But landing one of those loans required a lot of paperwork, and not everyone could qualify.
At least, that was the case before Karen Mills, the outgoing SBA chief, broke the news on changes to the program, the Jacksonville Business Journal reports. And it's all good news.
Here's what's being proposed:
- Less need for personal capital. The new proposed SBA loan process would eliminate the personal resource test. That's the current rule that requires a borrower to max out personal finance resources for a 7(a) or 504 loan, which are among the more common. The change would essentially eliminate the regulations about determining collateral for these loans. That translates into a lot of time and hassle saved for business owners.
- A more inclusive policy. Currently, many small businesses are disqualified from getting an SBA loan because of affiliations with other companies. But affiliating with a large company doesn't mean you don't need loans -- a fact the SBA itself has noted. The proposed changes would revise that rule and provide access to SBA loans for companies that were previously disqualified.
- Expansion of eligible projects. The SBA's nine-month rule states that only expenses incurred up to nine months before submitting the application can be included in expenses. Costs from before that time can't be included. But what if your project was interrupted by a natural disaster, a family emergency, or some other unavoidable delay? Well that won't be a problem going forward since the proposed changes eliminate that rule.
Of course, proposing new regulations doesn't mean that is exactly what will be put into place. The SBA is still soliciting comments on the proposals.
From there, they'll make final regulations that will go into effect probably later this year. So now is your time to speak up about SBA loans.
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