SBA Lending: Making a Difference for Small Business

For two years in a row the U.S. Small Business Administration has helped to put more than $30 billion into the hands of small business owners across the country. In fiscal year 2012 (October 1, 2011 through September 30, 2012), SBA loan programs posted the second largest dollar volume ever, surpassed only by the dollar volume in fiscal year 2011, which was heavily boosted by the loan incentives under the Small Business Jobs Act of 2010. The pace of SBA loan-making is a healthy sign for the national economy and the credit markets and is one of the foundations for ensuring the availability of financing to small businesses trying to establish themselves, grow and create new jobs for Americans.

Here in New England, the SBA backed just under 4,000 loans totaling $930 million in fiscal year 2012.

In Rhode Island during the same period, SBA approved 349 loans totaling $87.4 million.

Over the past year, SBA began streamlining and simplifying many of the loan programs to provide more access and opportunity for both lenders and small businesses. As part of this effort, SBA encouraged lenders to use more of their own paperwork and the agency’s updated processing systems, so that more than 80 percent of its loan applications can now be processed online.

These efforts, among other loan enhancements, have resulted in nearly 1,300 lenders returning to SBA lending, and have opened up more points of access to capital for small businesses wherever they do business. We have the results to prove it.

504 Loans Dollars Set All-Time Record. By improving the loan making process and by allowing small businesses to refinance their commercial mortgages for a limited period of time, we saw a record year for the Certified Development Company (504) loan program, which helped 9,471 entrepreneurs supporting $15 billion in small business lending. 504 loans can be used to purchase or renovate commercial real estate or machinery and equipment.

In New England, SBA and its Certified Development Companies loaned 636 small businesses $373 million using the 504 program. The CDCs approved 56 loans to Rhode Island small business that totaled $31.7 million.

CAPLines Loan Program Jumps 400 Percent.  A revamped CAPLines program, which provides working lines of credit to small businesses such as manufacturers and government contractors, jumped 400 percent from 108 loans and $118 million in fiscal year 2011, to 532 loans and $410 million in fiscal year 2012.

Low-dollar Loans on the Rise.  Lenders are making more low-dollar loans using the Advantage loan programs – Community Advantage (CA) and Small Loan Advantage (SLA). Community Advantage enables non-profit mission-based lenders to use SBA’s 7a Loan Guaranty Program for the first time. These programs encourage lenders to make low-dollar loans, which are an important tool for small businesses. The Small Loan Advantage ended the fiscal year with 820 loans for $106 million. Nearly 80 percent of the year’s SLA loans came after SBA simplified the processes on June 1.

SBA’s Growth Capital Program Breaks Record for the Third Consecutive Year. The Small Business Investment Company (SBIC) debenture program provided a record $2.95 billion to small businesses in fiscal year 2012, a 14 percent increase over the previous year and the highest single-year volume in the 54-year history of the program. This good news is due in part to a number of improvements that contributed to an increased number of new SBIC licenses and reduced license processing times.

As we approach 2013, SBA remains ready to help businesses start, grow or expand. For more information about SBA programs and services, visit: www.sba.gov, or contact the Rhode Island District Office at (401) 528-4561.

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