New SBA Limit Caps Goodwill Financing
New SBA Limit Caps ‘Goodwill’ Financing
The Small Business Administration announced that it is tightening its lending limits on the value of a business attributed to “goodwill,” the value not ascribed to bricks and mortar or other physical assets.
Beginning March 1, the SBA limited goodwill financing to 50 percent of the loan amount or a maximum of $250,000. The SBA does not directly lend money but it works with partner banks in offering loan programs.
Paul Merski, senior vice president and chief economist for the Independent Community Bankers of America trade group, calls the cap “arbitrary and random.”
“The last thing we want to do in this economic environment is to put arbitrary caps where you’re hurting the growth of the small business sector,” Merski says. “This is not a provision that is extremely well thought-out in the current environment to have capital flowing and supporting lending to small businesses.”
Other small business brokers and financiers said the change would force sellers of small businesses to finance the deals themselves if buyers couldn’t borrow from friends and family.
Source: The Washington Post (02/26/2009)
via REALTOR® Magazine-Daily News-New SBA Limit Caps ‘Goodwill’ Financing.
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