SBA approves record $20.6B in small-business loans during FY07

With 110,275 loans totaling more than $20.6 billion approved, the agency set records for the combined number and dollar volume of loans for the fiscal year, according to a news release.

SBA also increased loans to small businesses in underserved areas by more than 5.5 percent.

Small-business support

The $20.6 billion in loans were made mostly under SBA’s two primary small-business loan programs: the 7(a) program and the 504 program.

The 7(a) loan guaranty program – most often used for working capital – increased the number of loans to 99,607 loans in FY 2007 from 97,290 in FY 2006, although the dollar volume declined slightly to $14.29 billion from $14.52 billion.

The certified development company – or 504 – program, for the purchase of real estate and fixed assets, provided 10,668 loans worth $6.31 billion, up from the 9,943 loans worth $5.73 billion in FY 2006.

The total does not include an additional $2.65 billion in venture capital funding provided by SBA-licensed small-business investment companies to more than 2,000 small businesses.

“We play an increasingly vital role in enabling small businesses across the country to get the capital they need to start and grow their businesses, create jobs and build their communities, and we do it through programs that operate without a taxpayer subsidy,” said SBA Administrator Steve Preston in the release.

“This progress reflects the strength of our relationships with our lending and resource partners, who have been essential in providing record numbers of small-business loans in each of the last six years.”

Financial guarantees

Although SBA does not make direct loans to small businesses, the agency’s use of its guaranty authority enables commercial lenders and certified development companies to lend money that they otherwise would not lend to small businesses.

Nearly a third of all loans went to start-ups, and a third went to minority borrowers.

Loans to minority groups increased by 7 percent, with the largest increase in loans to blacks, which increased by 23 percent, to 8,903 from 7,238.

Overall, loans to businesses in underserved areas amounted to more than 36 percent of total loan approvals.

“We have made substantial progress in our ability to deliver loans to small businesses in underserved communities,” Preston said.

“SBA lending in designated Enterprise Zones, HUBZones and Low and Moderate Income areas increased by better than 5 percent, more than twice the increase in lending overall.”

During the last six years, SBA has approved more than 555,000 loans worth more than $107 billion to American small businesses – greater than the previous 10 years combined.

During this same period, the agency’s total small-business loan portfolio has grown to $66.7 billion, compared to $45.9 billion at the end of FY 2002 and $62.6 billion a year ago.