Good News for Small Business: SBA Loan Numbers, Limits Rise

By Rieva Lesonsky

The Small Business Administration (SBA), whose fiscal year ended September 30, reports some surprising news: Despite a tough economy, the number of SBA loans rose by some 30 percent in 2010.

The SBA approved $16.84 billion in loans (54,826 loans) in the past 12 months—an increase from $13.03 billion in fiscal 2009. (By comparison, in 2007, before the recession hit, the SBA approved $20.61 billion in loans.)

The stimulus enacted in February 2009 is responsible for much of the growth. It eliminated fees and increased the maximum loan guarantee from 75-85 percent to 90 percent. Between February 2009 and May 2010, the average weekly dollar volume was $330 million—much larger than the $172 million weekly average for the seven weeks before the stimulus, The Wall Street Journal reported.

The increase in lending is especially impressive in light of the obstacles borrowers faced. During fiscal 2010, the stimulus provisions had to be extended four times by congressional vote. This led to lengthy delays where borrowers who hadn’t received approval had to get into a “queue” and wait until Congress approved the stimulus extension. The longest wait took place this summer; the provisions expired in May and weren’t extended until the Small Business Jobs Act was signed September 27. Within one week of that signing, the SBA reported that $970 million in loans or 1,939 loans that had been sitting in the queue had been cleared.

As part of the Small Business Jobs Act, effective October 8, the SBA also officially increased the cap on various types of loans:

• The cap on SBA Express loans temporarily increased from $350,000 to $1 million.
• The cap on 7(a) and 504 limits permanently increased from $2 million to $5 million; for manufacturers and certain energy-related projects seeking 504 loans, the cap is now $5.5 million.
• The cap on International Trade and Export Working Capital loans has been permanently increased from $2 million to $5 million.
• The cap on microloans has been permanently increased from $35,000 to $50,000.
• The cap on Export Express loans has been permanently increased from $250,000 to $500,000.

These measures should make it easier for small businesses to get the loans they need—at least, until the stimulus provisions expire again at the end of calendar year 2010.

Image by Flickr user Kevin Dooley (Creative Commons)

This entry was posted on Thursday, October 21st, 2010 at 10:30 am and is filed under Capital Access. You can follow any responses to this entry through the RSS 2.0 feed.


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