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Main Street Monday — California Dissolves SAFE-BIDCO

September 25, 2017

Main Street Monday — California Dissolves SAFE-BIDCO

By Bob Coleman
Editor, Main Street Monday

Citing years of losses and minimal SBA loan activity the state of California has closed the doors of nonbank SBA lender SAFE-BIDCO.

A damning April audit citing excessive Executive Director travel to out-of-state conferences, and one EU trip, didn’t help.

A dwindling net worth over the past ten years reflects years of losses.

Says the State of California:

SAFE-BIDCO’s declining asset base has at least three consequences.

First, SAFE-BIDCO now has little or no capacity to make loans from its own lending capital. For the past two fiscal years, SAFE-BIDCO made $0 in SBA loans, Energy Efficiency loans and Microloans. Thus, SAFE-BIDCO’s ability to perform a key function — lending from its own capital — is compromised.

Second, SAFE-BIDCO is not in a position to rehabilitate its finances by increasing its stream of interest income. SAFE-BIDCO is now trapped in a cycle. Because SAFE-BIDCO’s capital has declined, SAFE-BIDCO is unable to make more loans. Because SAFE-BIDCO is unable to make more loans, it cannot earn more interest to covers its expenses.

Third, SAFE-BIDCO’s current condition puts at risk its ability to pay its expenses and debts, including a $2.5 million debt owed to the State of California. SAFE-BIDCO’s net asset position, particularly cash) has been evaporating rapidly.

Read the order here.
http://www.dbo.ca.gov/Laws_&_Regs/dfi_orders_files/2017/SAFE-BIDCO-Commissioner-Order-and-Exhibits.pdf

 

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