SBA Rule Change Makes a Difference for Main Street

1 min read • Dec 20, 2013 • Ty Kiisel

At the end of October I wrote about a change made at the SBA I thought could make a difference for Main Street business owners. Acting Administrator Hulit removed the feeds from loan amounts of $150,000 or less. The SBA announced the change at the end of September as part of an annual review of the fees they charge lenders and borrowers. Although the SBA loan guarantee program is not the biggest source of capital for small business generally or Main Street  particularly, I felt like this move had the potential to help Main Street business owners who are typically looking for loan amounts far below the average for their most popular 7(a) loan program (In 2012 the average was roughly $337,000 and in 2013 it was closer to $380,000).

Each week the SBA provides year-to-date statistics on SBA loan activity and compares them to the previous couple of years. This morning I took at look at the report for the week ending December 13, 2013 to see if there was any change in loan activity and how this new change may have impacted loan volume. What I found was pretty interesting.

Screen Shot 2013-12-20 at 9.13.33 AMIn fiscal year (Oct – Oct) 2012 the SBA approved 4,989 loans under $150,000. In fiscal year 2013 the number dipped slightly to 4,873. Since the rule change that took place in October of this year, the SBA has approved 4,811 loans under $150,000. If this trend continues, we could potentially see well over 20,000 7(a) loans under $150,000—an exponential increase in the number of these smaller loans. I think this was a good move by the SBA to encourage small business lending in the amounts that could have a greater impact on Main Street business and the year-to-date information above demonstrates that there is demand for these smaller loan amounts.

If you’re financial institution regularly participates in the SBA loan guarantee program, are you seeing a change in the way you approach the smaller loan amounts impacted by this change?


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.