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SBA smooths rocky loan road

In response to the credit crunch, SBA’s acting administrator, Sandy K. Baruah, announced loan-program changes to help the agency’s lending partners increase access to capital for small businesses.

First, an interim final rule allows new SBA loans to be made with an alternative base interest rate, the one-month LIBOR rate (London Interbank Offered Rate), in addition to the prime rate, which was previously allowed. In the past 60 days, both the prime and LIBOR rates have not yet returned to their historical relationship — of roughly 300 basis points between the two rates. The mismatch between the rates is squeezing SBA lenders out of the lending market, since their costs are based on the LIBOR rate.

Full Story: http://www.seacoastonline.com/articles/20081124-BIZ-811240302

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