Recently, the US Small Business Administration issued a Policy Notice lifting a long instituted restriction on the personal liquidity of sponsors/guarantors on SBA loans. You can find the policy notice here. The principals of 44 Business Capital were pleased to hear this great news. Since the SBA had raised its loan limit to $5MM, we have often seen loan requests where a principal exceeded the personal liquidity test but their company was struggling due to some externality. Despite the strength of the guarantor, banks could not do the loan because government regulations would require the bank to classify the loan day one, especially if the business was struggling. The lifting of this requirement allows struggling businesses with strong personal guarantors to get the financing they need when they don’t qualify for conventional financing in the new world order of banking.
In our estimation, the SBA program is not a “hand out” but a “hand up” which many of our small businesses need after emerging from the Great Recession. 44 Business Capital continues to work with small businesses throughout the markets we serve and looks forward to help even more with the removal of the “Personal Liquidity Test”. So go to where the banks go when they can’t do the deal, 44 Business Capital.