May 15, 2015
By Bob Coleman
Editor, Feedback Friday
Patrick, Patrick Patrick.
Your Bloomberg hit piece about SBA franchising lending yesterday is, well a hit piece.
As I said in my conversation with you for your article, banks and borrowers cover loan losses through the fees they pay to SBA.
Borrowers pay an upfront loan fee to SBA, and the bank pays an additional annual servicing fee to SBA.
The SBA 7(a) lending program operates on a zero subsidy.
Therefore, the federal government does not subsidize the 7(a) program.
The program pays for itself with those fees.
Loan losses do not cost the taxpayer a single dollar.
Why would you ignore that important fact?
And why do you continue the tired line bankers and the SBA are iinept? They aren’t.
You have that nice chart showing huge Quiznos and Cold Stone franchise losses.
I sent you the latest data.
Why won’t you report lenders and SBA got the message Quiznos is a challenged franchise concept and only two Quiznos franchise loans were made last year?
Or Cold Stone Creamery? Not one loan was made last year.
So, the answer to your question of “Nearly 20 percent get charged off by the SBA. Guess who Pays,” is the bank and the borrower. Not the taxpayer.
Patrick, your reporting is normally spot on, but you missed the mark on this one.
If I dish it out, I also have to take it.
Kurt Chilcott of the nation’s largest certified development center writes about my CAN Capital article saying, “Bob. Don’t we know that the 50% plus interest rates are not helping small businesses but only investors? Shouldn’t this be a part of any reporting on this? These press releases are very misleading!”
Criticism acknowledge and accepted sir!
Actually Kurt, CAN Capital rates are higher than 50%.
$4,000 for 4 months – $4,600 and 85.15% APR ($53/weekday)
$10,000 for 6 months – $12,100 and 77.49% APR ($92/weekday)
$15,000 for 9 months – $19,725 and 75.48% APR ($100/weekday)
$25,000 for 12 months – $33,750 and 62.45% APR ($128/weekday)