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LISC Small Biz Lender in WSJ

An article in TheWall Street Journal highlighted the indispensable role of SBA-guaranteed loans for small businesses, focusing on the story of the Westside School in Atlanta, the first borrower from LISC’s new affliliate immito. Westside’s owner and director, Honey Meadows, described how the loan, which was threatened by the government shutdown last winter, was imperative to helping her hire teachers and add classrooms.

The excerpt below is from:
Small Businesses’ $2 Billion Problem: Government Shutdown Leaves Loans in Limbo
By Ruth Simon, The Wall Street Journal

The longest government shutdownin modern U.S. history is squeezing funding for many entrepreneurs.

The Small Business Administration has stopped approving routine small-business loans that the agency backs to ensure entrepreneurs have access to funds, halting their plans for expansion and repairs and forcing some owners to consider costlier sources of cash.

Honey Meadows, owner of the Westside School, a child-care center in Atlanta, plans to use a $405,000 loan guaranteed by the SBA to make needed improvements and refinance roughly $275,000 in existing debt. With SBA approvals at a standstill, Ms. Meadows can’t build a wheelchair ramp, buy a van to transport children or add classrooms and teachers.

“It’s scary to think we have these plans, and they may be put on hold,” said Ms. Meadows, who currently cares for 38 children. The new loan she is seeking from the SBA will carry an interest rate of about 8.25% and a 25-year term, according to immito, Ms. Meadows’s lender.

SBA loans are a mainstay for many entrepreneurs, who generally can borrow as much as $5 million to start, buy, expand or run a small business through the agency’s two biggest programs. While the SBA doesn’t directly fund small-business owners, it covers as much as 90% of loan losses, giving an incentive to banks and other financial institutions to finance businesses they might not otherwise serve.

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