SBA Granting More Credit to Small Businesses

There was some consternation a month or so ago, in the run-up to and then during the federal shutdown, about how the impasse would create difficulties for small businesses when it came to getting loans from the federal government. Despite that minor hiccup, it seems that the U.S. Small Business Administration is now lending at a level along the lines of what it achieved in the previous two years.

In the 2013 fiscal year, the SBA extended small businesses some $29.6 billion in loans, nearly at the level observed in each of the two previous years, which in both cases exceeded $30 billion, according to the federal agency’s most recent statistics. This funding has likely come at a critical time for many owners whose companies may still be recovering from the national economy’s downturn in the past few years, particularly because many banks are keeping their small business lending efforts extremely restricted. Some experts even say that the lack of credit availability from major lenders may even be detrimental to the small business sector’s recovery as a whole.

“Under President Obama, SBA lending has reached record levels and we continue to get more capital into the hands of small business owners than ever before,” said Jeanne Hulit, the acting administrator for the SBA. “Small businesses are the engine of our economy, and reaching our third highest year of SBA lending in FY 2013 demonstrates the strength and resiliency of America’s 28 million small businesses as they continue to recover from the Great Recession and drive our economy forward.”

In fact, the SBA has extended some $126 billion in financing to 260,000 small business owners and other entrepreneurs since President Obama took office in January 2009, the report said. Further, the number of businesses (54,106) that received the slightly diminished level of funding during the 2013 fiscal year was actually up from 2012 (53,848), but still down significantly from the previous year (61,689).

Companies obtaining smaller loans enjoying more benefits
The potential reason for the uptick in businesses granted credit, even as the total value of credit extended declined, is that the SBA’s new initiative to get smaller amounts of funding into the hands of companies that don’t need as much money as others has been more or less successful, the report said. The Small Loan Advantage programs it recently introduced – which involve financing of less than $350,000 – are now lending 300 percent more thanks to their having seven times the number of lending partners involved. In all, the 2013 fiscal year saw some 4,000 loans go through the SLA program, with a total value of close to $625 million.

Other types of credit extended by the SBA, including capital lines of credit through the CAPlines program, and long-term fixed-rate 504 loans, were also quite popular in this fiscal year, the report said. As a consequence, many small businesses are now enjoying the variety of options that grant them the specific type of financial flexibility they need to allow their companies to continue to grow and flourish down the line.

Additional financing is often vital for small businesses, but not always necessarily easy to obtain. For this reason, owners may need to do more to shore up their financial situations on their own, and that could include finding more affordable small business insurance policies. Cutting costs for workers’ compensation or general liability insurance, for example, can likely go a long way toward giving companies a more stable foundation, saving them as much as thousands of dollars per year.