Smart Borrower Blog

Archive for December, 2009

Why Banks Promise to Lend More But Won’t

Small businesses need more loans. Home buyers and car buyers need more loans. College students need more loans. It seems everyone is looking for funding but is not finding it with banks around the country. Two weeks ago, President Obama met with a group of Wall Street executives and bankers. He urged, or rather begged them to start lending more. Specifically he commented that “banks could be doing more to lend to small businesses.” A recent article by Chuck Saletta on the Motley Fool website does a good job of explaining why banks have little or no intention of lending... more »

Obama Signs Bill to Extend Funding for SBA Loans

Starting today, small businesses will once again be able to apply for and receive two popular SBA (Small Business Association) loans, the 7 (a) and the 504, with no fees and a higher guarantee rate of 90%. From February through November of this year, this federal funded stimulus package helped thousands of businesses across the country. Last week, to the relief of the SBA and small business owners, Obama signed a bill to extend the funding. The Small Business Association is an independent federal government agency that helps protect the interest of small businesses. According to the SBA website, their... more »

Bailout Has Not Saved All Banks

New data from bank research firm SNL today showed that even though high profile banks like Wells Fargo, Citigroup, and Bank of America have paid off their government loans, there are 55 smaller lenders that have fallen behind on just repaying the required quarterly dividends as of November. There were only 33 such tardy banks in August. To date, the government has shut down 140 banks this year, a record high since 1992, and this new data shows that more closings may follow next year as lenders are unable to meet their financial responsibilities. The government loans are part of... more »

No Sign of Looser Auto Lending in 2010

The latest forecast about auto loans points to rising delinquency rates by the end of next year, a sign that lenders are likely to remain stingy with their loans for some time. Credit information collector TransUnion says that the delinquency rate (borrowers that are 60 days late or more on their auto loans) is expected to reach 0.86 percent by the end of 2009, but will probably rise to 0.92 percent at the end of 2010. “Our forecast indicates we will see auto loan delinquencies drop in the first and second quarters of 2010 due to many factors such as... more »

Credit for Small Businesses Keeps Disappearing

Regardless of on-going efforts of the Obama Administration small business credit, at shockingly high rates, continues to dwindle. A treasury report just released this week, shows that major banks across the country decreased small business loan balances by another billion dollars in October. This leaves some small businesses in a financial bind, struggling to expand and to provide for essential expenses like everyday operation costs. Another study released last month by the Treasury Department found that 22 banks that benefited the most from the Treasury Bail Out Program have decreased their business lending by 11.6 million just since April. Obama,... more »

Should Bankruptcy Allow You to Shed Student Debt?

Traditionally, even if you file for bankruptcy, you will still be required to repay your students loans. Almost all of them are either provided or guaranteed by the United States government and the thinking is that if bankruptcy could wipe out all or even just a portion of one’s student loans, it would encourage graduates to file more often. This would in turn make lenders less willing to offer student loans. This issue is being heard and decided by the Supreme Court presently as it considers the case of Francisco Espinosa, a Phoenix airline ramp agent who had the interest... more »

New Statistics Show High Federal Student Loan Default Rates

The Education Department recently released data on Federal student loan default rates gathered from over 5000 colleges and universities across the country. The data showed shocking high rates of recent grads who had defaulted on their college loans within the first three years of repayment. The stats covered those students who were scheduled to begin payments in 2007 and by the end of fiscal year 2009 had defaulted on their loan. The figures further showed that the highest percentage of default rates was from those students who attended for profit schools. In fact, default rates at these institutions were three... more »