SBA Loan Maturing

October 23, 2009 at 9:10 am (credit cards) (, )

What do you do when the bank tells you they’re closing your loan before you have paid it off? My SBA loan matures next year, which will definitely be affecting my debt-repayment strategy. I hadn’t realized that it had a fixed end point (it matures 5 years from the date it opened, which I had been blissfully unaware of until this summer), so I have to figure out where to move approximately $23,000 of debt (the balance I expect I’ll have still on it when it does mature).

I currently have $38K in debt. My available credit options are:

SBA loan (30K limit, ending mid-2010)
Personal Line of Credit (15K limit, currently transferred to two 0% interest cards recently opened)
Discover (5K limit, $4K in use)
US Bank (10K limit, $6K in use)
Citibank (13K limit, $0 in use; will be closed within 1-2 years due to opting-out of an interest rate hike).

By next summer’s deadline, I expect to have $33K – $34K in debt. I want to refuse to use my Citibank (screw them, not very happy with them, and I’ve been with them for like 15 years). And I need to move all debt from the SBA elsewhere. I had been thinking of trying to get accounts with some of the local credit unions and getting some low-interest loans through them in the month before the maturation occurs. I can also apply for an increase in my Line of Credit limit. The one thing that will hurt me is having opened 2 new credit cards in the past year. One of them will be more than a year old by the deadline, but the US Bank will still show it being new within 10-11 months, which will ding my credit score. I’ll have to see how it turns out. If worse comes to worse and I get no additional credit limit raises or new accounts (with low-interest rates of course), then my only options are to use the credit cards I just opened to hold my debt until I can pay it off. At higher rates than I had planned on having. UGH! Here’s the worse-scenario outcome:

SBA (kaput, $0) – $33K to find a home for
Personal Line of Credit ($15,000 in use; 10%) – $33-15 = $18K homeless debt
Discover ($5K in use, unsure of % rate) – $18K-$5K = $13K homeless debt
US Bank ($10K in use, unsure of % rate) – $13K – $10K = $3K homeless debt
Citibank (will be forced to use the remaining $3K and house it for up to 1 year before closing unless I can open something else, or get a limit increase in the above 3 loans/credit cards).

I may also drain my emergency fund if the Citibank needs to be closed before I can pay it off. Ugh. Bad news, but sometimes I need that as a kick in the butt to get motivated about being frugal in my spending habits and generous in my debt payment habits. No upcoming vacations for me! It will also be a lean Christmas, even though I’ve been saving money for it. And it sucks that I have to keep using credit cards after the 0% interest expires (which was NOT my original intent).

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