“Starting last October and running through the end of last month, the department [the SBA] signed off on federal guarantees backing $29.6 billion in small-business loans, down slightly from $30.25 billion last year and an all-time peak of $30.5 billion in 2011,” writes J.D. Harrison for the Washington Post. “The total number of loans, on the other hand, increased from 53,848 last year to 54,106 in 2013.”
Although the SBA is not the biggest player in small business financing, they are an important player. According to Jeanne Hulit, the acting SBA Administrator (and also quoted by Harrison), “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.”
I’m encouraged by the fact that the SBA has continued to support the small business owners looking for a loan, despite the decline we’ve witnessed over the same period by many banks and other traditional small business lenders. Harrison suggests, “In June 2012…banks had $588 billion in outstanding loans to small firms, down 3.1 percent from the end of 2011. By comparison, they had $1.9 trillion in big-business loans outstanding, up 12 percent from the end of the previous year.”
Despite the fact that small business creates two out of every three new jobs and hires roughly half of the U.S. workforce, the traditional sources of small business financing seem to be leaving all but the biggest small businesses behind. This trend isn’t something new either, it’s been going on for the last decade or more.
Despite what might otherwise be considered grim news, there are still a lot of small business loan options available to Main Street—but you might not find all of them at your local bank. The SBA’s recent elimination of fees for loans under $150,000 has the potential to really help the smallest small business owners by giving community banks who are part of the SBA network a less expensive way to process the smaller loan amounts many small business owners are looking for. Recent SEC (Security and Exchange Commission) decisions making crowdfunding a real option for Main Street is something else to be optimistic about. And, alternative lenders offering specialty loan products to fill specific small business financing needs are making even more capital available to Main Street.
Although the SBA, like every big organization, has some problems, I have to applaud their continued commitment and acting Administrator Hulit’s decision to reduce fees to make the SBA more accessible to the smallest small businesses. This is good news. I hope we’ll continue to see more of the same.
Small business evangelist and veteran of over 30 years in the trenches of Main Street business, Ty makes small business best practices, tips and advice accessible by weaving personal experiences, historical references and other anecdotes into relevant discussions about leading people, managing a business and what it takes to be successful. Ty writes about small business financing and other best practices for Lendio, in addition to sharing his passion for small business every week on Forbes.com.