VSBFA Responds to Financial Crisis and Credit Crunch
– Will assist in restructuring existing bank debt to protect Virginia jobs –
RICHMOND— In response to the current global credit crisis, and in an effort to assist Virginia businesses during this uncertain time, the Virginia Small Business Financing Authority (VSBFA) is prepared to provide assistance to banks that restructure existing loans to qualifying businesses in an effort to preserve Virginia jobs. This assistance can be in the form of guaranties or portfolio insurance.
"I am proud that the VSBFA is taking a productive role in helping Virginia's banks and small businesses protect Virginia jobs during this difficult time," said Governor Kaine. "In good times, and in bad, the Virginia Small Business Financing Authority is there to assist Virginia businesses and help create jobs for our citizens."
The VSBFA will allow for the enrollment of loans in its Capital Access Programs and consider a guaranty of 75%, or $500,000, whichever is greater, for lines or loans to restructure existing bank debt. The restructuring should allow a) terms longer than the original note called for, and/or b) lower interest charges, and/or c) increased flexibility in the terms to match the borrower's repayment ability.
VSBFA "restructuring" assistance is to be used to assist banks in working with their business clients who are experiencing financial stress due to a variety of reasons, such as:
- Reduced market values of underlying collateral;
- Reduced sales volume that has an improved outlook on the near horizon;
- Businesses that need a short-term (within one year) payment moratorium to allow for interest only payments as the company responds to a down-turned market;
- Seasonal cash flows insufficient to clear line debt.
It has been the VSBFA's philosophy that government financing assistance should be provided with the greatest reluctance and only when the public interest is served through the creation and retention of Virginia jobs, and when private sector lenders are unable to meet the credit needs of qualifying Virginia businesses.
During these difficult times, the VSBFA will try to help Virginia businesses and their lenders negotiate sound credit terms which will, in the long-term, benefit the business, the lender and the Commonwealth.
For more information about our Loan Guaranty Program and the Capital Access Programs visit the VSBFA at www.vdba.virginia.gov/financing_business.shtml or call toll-free at 1-866-248-8814, or in the Richmond area at (804)371-8254.
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