The U.S. Small Business Administration enjoyed another banner year in fiscal 2014, approving a record $19.19 billion in loans under its 7(a) program, a 7.4% increase on last year.

The agency had been authorized to lend $17.5 billion in the year ended Sept. 30, but when it became clear that 7(a) lending would exceed that amount, the SBA secured an increased authorization from Congress in mid-September.

The number of approved 7(a) loans rose 12% to 52,044. Other loans that did well in fiscal 2014 were those $150,000 and under, which saw an increase of 23% in number of loans (30,675) and 29% in approved dollars ($1.86 billion) over fiscal year 2013. (The maximum borrowing amount for 7(a) loans is $5 million.)

Since the beginning of fiscal 2014, the SBA has not been charging fees on those loans. In October, it announced that the fee relief would continue for another fiscal year.

“As our economy continues to grow and recover, small businesses are the essential fuel to that continued growth,” SBA Administrator Maria Contreras-Sweet said Thursday in announcing the record 2014 numbers.

“We know that America’s small businesses pack the biggest punch, creating two out of every three net new private sector jobs in the U.S. These small businesses are the cornerstone of our communities, so their success and expansion is vital to the nation’s economic growth,” she added.

Fiscal 2011 and 2012 were both record years for the SBA, when it provided more than $30 billion in loans to small businesses. Fiscal 2013 was the third-highest year for SBA lending.

The 7(a) program is designed to provide small businesses with financial assistance to cover the vast majority of business expenses, such as short and long-term working capital, exports, and, under certain conditions, refinancing existing debt.

The SBA has also eliminated fees on loans between $150,000 to $350,000 made to veterans under its Veteran Advantage initiative.

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One response to “SBA Approves Record $19B in 7(a) Loans”

  1. As we learned recently from MIT Professor Jonathan Gruber, it is very easy to create a lack of transparency by simply sharing only part of the truth. This SBA press release follows that rule explicitly.

    First, this was not a record year for SBA lending – that was 2011. This is the third highest year.

    But the big deception here is that the SBA is reaching more business owners than ever before. So here are the real facts, grudgingly given to us by Terry Sutherland, SBA Press Director.

    98% of businesses have 1-19 employees. They need loans of $50-$150,000. In 2008, the average SBA loan was $185,000 and 24% of them were under $100,000. Using the statistics trumpeted in this article, the average SBA loan in 2014 was a bloated $369,038. And more critically, Sutherland says less than 9% of loans are now under $100,000. The SBA and the banks have nearly abandoned the 98% of businesses with 1-19 employees, in favor of giving loans to the 2% of the largest businesses in America.

    How did this happen?

    In 2008, the SBA embarked on the largest expansion of the definition of small in its history, redefining absurdly large businesses with 1,500+ employees and revenues north of $30+ million as “small”. So far this has resulted in 72,000 giant corporations being reclassified as small. That expansion continues today and tens of thousands of more giants will be miraculously made small again in the next two years.

    Both the banks and the SBA love this process because now they can make significantly fewer loans in much higher amounts to a few, exclusive large companies, and still claim they are helping “small” businesses. Nothing could be farther from the truth.

    This press release is a disgrace to the lack of transparency about what is really going on in the SBA, and news organizations need to stop reprinting as if it is the full truth. The full truth is that the SBA has abandoned the 98% in favor of the 2% who are more politically connected.

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