What is everybody's opinion of the latest Small Business Administration loan offering?

[Brian]

Loans up to $35,000 at prime + 2.0% (currently 5.25%) but the government pays all of the interest so they are interest free for the borrower.

A six month draw and then twelve month deferment on payments (that means no payment by the borrower for 18 months while the government is paying interest.

A five year repayment with a 100% guarantee to lenders from the SBA. (if the borrower defaults the government will pay the lender 100% of what is due).

The SBA expects most of these loans to default.

These will go only to approved business types (no casinos or strip clubs) and only for approved purposes (hopefully to save the small business).

http://www.sba.gov/recovery/arcloanprogram/index.html
You actually can discharge it in a bankruptcy. The lender will follow the bankruptcy and once discharged will file for their guarantee.

 

[Paul Grass is back]

sounds like a scam I bet John Murhta's people get a few loans and default

 

[Live To Fish]

Too bad they don't have sweet deal for startups. I'm trying to start my own business.

 

[Monkey Pig the 2nd]

What a bunch of idiots, sign me up for that, looks like free money that I wont pay back!!

 

[starry night]

It sounds like nobody wins except for the people actually putting the money in their pockets.

 

[krollohare2]

I wouldn't be so fast to get a government loan of any kind. First of all, if you default, its like super-glue. You probably can't even get rid of it in a bankruptcy that easy.

Second of all, if you don't fill it all out honestly and say you get caught (assume you're not that lucky), there's probably some horrific criminal penalty attached too.

Frankly, everyone I ever knew who got involved in any Federal loan program, got screwed royally up and down the line.

The strings that are written into the loan docs themselves are dizzying.