A Virginia agency unveiled a plan Thursday to help banks restructure loans for Virginia businesses suffering from the global credit crisis.
The Virginia Small Business Financing Authority will consider providing a guaranty of 75 percent or $500,000 — whichever is greater — for restructured bank loans. The authority says restructuring should do at least one of the following: extend the loan’s term, lower its interest, or increase repayment flexibility.
“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,“ Governor Timothy M. Kaine said in a statement. “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 authority will only back loans that are restructured for businesses that have suffered financial stress, such as reduced market values of collateral or reduced sales volumes. The program could also be used for businesses that need short-term payment suspension or those with an insufficient cash flow to cover their debt.
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