Bay Colony Development Corp. in the News

In December 2012, the 20 year “all-in” fixed rate for 504 loans fell below 4.0% for the first time in the history of the program. Also, the 10 year rate, which adjusts every two months, is at a record low, hovering just above 3.05%. It is a great time to use the 504 program.

In October, we welcomed Rosemarie Finn to our underwriting staff. Rosemarie has a long and distinguished banking career, with the majority of her time spent with Bank of America. In a very short period, Rosemarie has learned the ropes and has really helped us improve our responsiveness. After four consecutive years of record growth, we needed to add to staff to maintain/improve our application turnaround time. Even with substantial volume over the past quarter, with the addition of Rosemarie and the continued hard work of our underwriters, we do not have a backlog. All completed applications are at the SBA or being actively worked on by our underwriters. The result is an incredibly quick turnaround time.

Despite the economic downturn and recession, we’ve had one of our best years to date at Bay Colony!  Our track record of success is proof that New England’s small businesses are thriving and helping bring our country out of the worst economic conditions in recent history.  Check out some of our 2009 statistics:

• In Bay Colony’s 28-year history, the SBA has only declined two of our loans, the last one being six years ago.

• In FY 2009, which ended 9/30/09, SBA 504 Loan volume experienced a 27% nationwide decline. Bay Colony recognized a 93% increase in loan volume for this same period and had the second largest year-over-year dollar volume increase in the country.

• In FY 2009, during a recession, SBA 504 Loan volume still exceeded $195,000,000 in New England alone.

• Most loans are fully approved in less than 2 weeks, usually before the bank has reached a final decision.

• Our loan volume for the quarter ending 12/31/09 is on pace to be one of, if not the biggest quarter in Bay Colony’s 28 year history.

If you are you interested in expanding your business in 2010, look here for more information about the SBA 504 Loan or start your application process here.

The Obama administration has proposed a series of propositions to relieve financial tension and expand business for America’s business owners. Highlighted below are three of the most important initiatives announced by the president that will affect you:

Relinquishing fees and increasing guarantees for loans backed by the SBA:

Increasing guarantees would help calm fear among lenders, who are cautious about new SBA loans. “They’re being told not to take additional risks,” says Chris Hurn, co-founder and chief executive officer of Mercantile Capital Corp., an Orlando, Fla.-based lender that issues commercial real estate loans through the SBA’s 504 loan program. “And in banking parlance, a risk is a loan.”

SBA programs are in obvious need of a boost. The number of 7(a) and CDC/504 loans fell 35% in fiscal 2009. The number of banks issuing these loans increased, thanks to American Recovery Act guaranteeing 90% of each loan. In a press release in November, SBA said that it had depleted stimulus cash for both the 7(a) and 504 loan programs and closing the line for ARRA loan applications in the New Year.

Eliminating capital gains taxes on small business investment for a year:

Just a day after President Obama announced his plan, the House of Representatives voted to increase the capital gains tax rate for venture capitalists and hedge fund managers to 35%, up from 15%. Hope is not lost, as the Senate could still shut down the proposed increase. Mercantile Capital’s Hurn thinks eradicating the tax altogether would be a godsend to small business owners. Investors would be able to endow their capital without the fear of the tax penalty. In turn, more entrepreneurs would be able to attain the cash needed to start their businesses. “My theory is that there’s still a tremendous amount of capital that’s sitting on the sidelines,” he says. “If you believe the future of our economy starts with small business, then you ought to give an extra incentive to invest in that particular sector.”

Encouraging small businesses to create jobs with a possible tax incentive:

For small businesses looking to add jobs, a tax break would be a great benefit. But small businesses aren’t likely to hire a new employee unless they can justify it with additional work. An October survey of 250 small business owners by The Ewing Marion Kauffman Foundation found more than a third said they implemented layoff’s in the past year, only 5% had added jobs, and more than half said their business volume and profits had dissipated.

U.S. Treasury Secretary Tim Geithner and Karen Mills, head of the U.S Small Business Association, hosted the Small Business Financing Forum on Nov. 18 at the U.S. Treasury Department, sustaining a pledge by President Barack Obama when he announced two initiatives to boost lending to small businesses last month.

Under President Obama’s plan, the Treasury would utilize Troubled Asset Relief Program resources to provide low-cost capital to community banks, which they would use for small-business loans. Obama also called for increasing the size limit on SBA loans to help strong small businesses develop as the economy recuperates.

The Treasury Department is working on the final terms of the program, and it could be up and running as early as December. Smaller community banks may be apprehensive about participating in the program because of current conditions. In order to ease lenders reservations, Congress has imposed limitations on recipients of TARP funds, such as restraining executive compensation and giving the government an ownership stake.

To watch the forum in its entirety, visit the link below:

http://www.sba.gov/smallbusinessforum/index.html

The benefits from the American reinvestment and Recovery Act appear to be winding down. It is possible that as early as December 2009, the funds covering many of the fees may run out. If you have a borrower with an immediate need, seek 504 approval now to beat the fee increase.