12/07/17

The Bright Outlook for SBA Lending

Whether or not you live in California, you’ll probably be interested in the latest reports from the U.S. Small Business Administration’s office in Fresno. The office has a 15-county jurisdiction in the Golden State, and for the 2017 fiscal year, it guaranteed over $425 million in loans. For those keeping score at home, that’s an increase of more than $6 million compared to last year.

“The steady, continued growth of SBA’s loan volume underscores this region’s economic growth, and highlights small business confidence in the economy,” said Dawn Golik, acting director of the Fresno district office. “During 2018, the Small Business Administration will continue helping small businesses which, nationally, are creating two out of every three net new jobs.”

As Ms. Golik pointed out, what’s happening in California isn’t unique. Small businesses nationwide are enjoying a period of prosperity. One of the most telling manifestations of this is revealed through devices just like the one you’re using to read this article. Here’s the experiment: go to Google Trends and type in the words “business loan.” You’ll see that online searches have increased substantially over the past few years.

Entrepreneurs are looking, and lenders are answering.

According to experts, the economy is playing a key role in this resurgence of small business lending. The markets are healthy, with the Dow Jones surpassing 24,000 not too long ago. And the holiday shopping season is here, bringing increased consumer spending. This results in optimism from entrepreneurs and lenders alike.

Another key factor is how the Small Business Administration (SBA) is signaling that it’ll reduce its equity requirement for business acquisition loans. This would make SBA loans more accessible to business owners, so an increase in applications wouldn’t be surprising.

Lastly, there’s a pro-business approach in Washington that’s yielding noticeable results. This includes looser regulations and higher interest rates, which prompts lenders to loosen their purse strings.

More specifically to entrepreneurs, tax reform will likely bring big benefits to pass-through entities. The majority of small businesses are set up as pass-through entities, including sole proprietorships, limited liability companies, and partnerships. So if your business falls into one of those categories, listen up. The Senate has created a small business tax break in their tax bill to help these types of smaller businesses compete with bigger corporations.

The House and Senate will work together to merge and complete their proposed tax reform, with small businesses being among the big winners. And adding these tax breaks into the already favorable lending climate means that 2018 offers a bright outlook for entrepreneurs.

Get more small business tips from Lendio.

About the author

Grant Olsen
Grant Olsen

Grant Olsen is a marketing and technology writer. He has written for healthcare companies, outdoor gear manufacturers, international airports, and dozens of small businesses. He is also the author of the book “Rhino Trouble.”

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