Recent small-business lending has been reflecting strong economic trends, according to the United States Small Business Administration (SBA), which announced its FY19 lending numbers. They show that the SBA guaranteed over $28 billion to entrepreneurs who otherwise may not have had access to capital to start or expand their businesses.
Acting SBA Administrator Chris Pilkerton commented, “A strong economy is powering America’s 30 million small businesses, and the SBA’s FY19 numbers bear that out. Our 504 and Microloan programs continued to grow from last year, as all of these loans are designed to create jobs and grow small businesses in communities across the country.”
The SBA says that during the FY19 period, its flagship 7(a) loan program made approximately 52,000 7(a) loans totaling $23.17 billion. These loans provide financial assistance to small businesses to acquire land, purchase equipment, or increase working capital.
William Manger, associate administrator for the SBA’s Office of Capital Access, said, “With a strong economy and historically solid small business optimism, we know that 7(a) lenders are making loans conventionally without the SBA guarantee.”
The SBA’s 504 loan program also grew, with over 6,000 loans for $4.9 billion. This growth, Manger noted, was due to the longer term and low fixed interest rate.
The 504 program, or CDC (Certified Development Companies) /504 loan program, provides capital to small businesses for acquisition of fixed assets. It is designed to promote economic development through fixed-rate financing. The SBA authorizes CDCs to provide financing to small businesses with the help of third-party lenders (banks). The maximum loan amount is $5 million, though there are exceptions for energy-efficient or manufacturing projects that qualify for up to $5.5 million.
Manger also said he is proud that the SBA’s Microloan program had a record year, with a nearly 7.5-percent increase in small business lending. The Microloan program provides loans to nonprofit-lending intermediaries that make loans of up to $50,000 to small businesses on “reasonable terms.” During FY19, 5,500 of these loans, totaling $81.5 million, were provided.
The SBA is also innovating and improving processes through technologies, such as its Lender Match platform, which lets entrepreneurs fill out an online form and connect with an SBA-approved lender within two days. It says the platform has generated 4.4 million leads on behalf of small businesses to lenders. Lenders have contacted over 230,000 unique borrowers with financing options.