10 Jul Great News for Small Business Community as SBA Loosens Its Lending Terms
Securing a business loan can be a tall order especially when you are a startup business needing working capital. Even worse when you are in a risky industry like hospitality, or food, and beverage. If this is you, Small Business Administration (SBA) Loan can help you transform your business dreams into reality.
Following SBA reforms, the business community has been reaping benefits with more loan approvals in the first fiscal year. A report from SBA showed that 17, 550 loans below $150,000 have been approved in the first half of 2024, totaling to $1.2Billion. In 2023 the same period, 13,000 loans within the same category were approved by the Agency.
SBA 7 (a) small dollar loans (below $500,000) also grew from $2.1 Billion to $3.7Billion in the first half of the past 3 fiscal years. Loans within this category doubled from 12, 213 loans 3 yrs ago to 25, 273 in the first top half of 2024 fiscal year.
In the next seven years, the Agency is committed to approve more small dollar loans below $150,000 following their recent reforms. Businesses in California, Texas, Georgia, and Maryland saw an increase in small dollar lending with a percentage of 74, 58, 64 and 62 respectively.
According to an SBA official, some of the organizations that have already benefited from these loans are in manufacturing, retail trade, construction, and arts and trade. Small-dollar lending is usually overlooked by financial institutions due to high risks and low profit margins. This has led to SBA increasing its loan approval to support small businesses.
Republican lawmakers have criticized the Agency’s move to increase small-dollar loans, claiming the move is bound to result in more defaults. However, the SBA said its 7 (a) loan portfolio is in good health as it has an early problem rate of 2.4%. If the early problem rate surpasses 4%, it is considered high risk.
To make sure they keep the momentum, the SBA is educating lenders on their latest changes on its program to spark interest in lenders who were not previously interested. Lenders who offer SBA small dollar loans are likely to report doubling or tripling of these loans for the first half of 2024 as compared to the same period last year.
This is great news for small businesses community amid tight bank lending terms. Looking for SBA loan? At Countrywide Financial Solutions we help you source the financing you need. We are a trusted financial company by SBA lenders for fast and efficient loan approvals. Whether you are a startup, need working capital or B, C, D credits, our experts will help you get the right financing for your business. Contact us today and let’s talk financing.
