Keep it simple: SBA revamps lending programs

SBA - Daniel Hannaher / Region VIII Administator
Daniel Hannaher

The U.S. Small Business Administration works best when it encourages an open conversation with the small business community it serves. SBA staff is on the ground every working day speaking with and on behalf of small businesses and the associations and resource partners that represent them. 

At SBA, we create loan products in response to private sector input. In particular, we exchange ideas with banks, credit unions, certified development companies, chambers of commerce and various lender associations, resulting in collaborative products and services demanded by small business. The lesson we’ve learned over the last couple of years: keep it simple and in line with what the lending community knows works best for its customers.

Starting in June, the SBA revised portions of the Small Loan Advantage (SLA) program to  simplify the application process, speed up approvals, expand the number of qualified lenders and increase the loan cap. The SLA program is structured to encourage lenders to make loans of $350,000 or less, which often benefit small businesses in underserved markets. The SLA program simplifies and streamlines paperwork, making it more cost effective for lenders. 

It can be tough for small businesses to manage their cash flow. They’ve got payrolls to meet, inventory to buy and customers to please. A revolving line of credit could help small businesses manage their cash cycle. This is why SBA also re-engineered its Capital Lines (CAPLines) program.

CAPLines offers one more tool for small businesses to grow and create jobs. Small businesses often compete for contracts to help them expand. One of the biggest “growing pains” associated with winning a new contract is that the business often doesn’t have the necessary cash on hand to hire workers and buy materials to fill the order.  CAPLines provides a path for these small businesses to finance contracts while avoiding high interest rates through an SBA revolving line of credit.

CAPLines allows banks to use more of their own streamlined processes, and we are seeing volumes that are up 220 percent. We expect we will do more loans this year than we did in the past 10 years.

In addition, small businesses that use the CAPLines program will benefit from the new increased SBA 7(a) loan limit of $5 million, which went into effect with the Small Business Jobs Act. These larger loan sizes will help small businesses poised to win bigger contracts, creating jobs as a result and an economy that’s built to last.

Everyone knows how important small businesses are to the economy. Over the last 15 years, small businesses created two out of every three net new private-sector jobs.    Half of all American workers own or work for a small business. We’re counting on small businesses to drive our economy to a full recovery. 

SBA is here to help, and we’re constantly looking for ways to provide access and opportunity to the American small business owner.  SBA loans are grounded by a smart public-private partnership, and that’s a powerful bang for the taxpayer buck.