SBA Loan Guarantee Programs Valuable to Many Small Business Borrowers

2 min read • Nov 15, 2013 • Ty Kiisel

The SBA loan guarantee program isn’t the biggest source of capital for Main Street, but they did guarantee $29.6 billion in small business loans from October 2012 through October 2013. “The SBA’s 2013 totals include more than 5,000 loans for $745 million under the agency’s relatively new Small Loan Advantage program, which is intended to get more small-dollar loans to firms in underserved communities, and 682 loans for $500 million under its CAPLines initiative, which helps entrepreneurs access short-term working capital,” writes J.D. Harrison for the Washington Post.

Combine that with the recent announcement to eliminate fees on SBA 7(a) loans of $150,000 or less and I’m encouraged by what the SBA is trying to do to make small business loans more accessible to the Main Street business owners who have been left out in the cold over the last few years as many commercial banks have moved upstream to bigger and likely more profitable customers.

“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,” says Acting SBA Administrator Jeanne Hulit.

Although there are those who like to bash the SBA, I don’t happen to be one of them. I agree, the SBA loan guarantee program isn’t perfect, but I recently spoke to a community banker who suggested that although commercial real estate loans were their small business lending bread and butter, the SBA’s 7(a) loan program made it possible for them to work with Main Street business owners they otherwise couldn’t without the loan guarantee—their bank was just too small to make those small business loans that weren’t backed by real estate without the SBA.

In 2012 the average SBA loan size was $337,000 and this year is roughly $380,000—much more than the average business owner on Main Street is asking for. I’m encouraged by recent efforts being made by the SBA to incentivize banks to lend in the smaller amounts by eliminated fees. I think it’s a step in the right direction because the businesses this helps are the job creation engine of our economy creating two out of every three new jobs.

Although the SBA isn’t the biggest source of capital for small business, they certainly set the tone. Unlike sexy tech startups able to entice venture capitalists to invest in their technology, Main Street grows on borrowed capital. Anything that makes more capital available is a good thing, in my opinion.


Ty Kiisel

Small business evangelist and veteran of over 30 years in the trenches of Main Street business, Ty makes small business financing and trends accessible in common sense language devoid of the jargon.