Helping lenders “get to yes” on small business loans remains critical to America’s economic health and prosperity.
Small firms employ half the country’s work force and create nearly two-thirds of all private-sector jobs. Federal Reserve Chairwoman Janet Yellen recently said small businesses deserve a “considerable share of the credit for the investment and hiring” that powered our recovery following the financial crisis and credit freeze.
Throughout my six-state region, those of us at the U.S. Small Business Administration are working hard alongside our lending partners to increase credit availability for all small firms.
Several months ago, the SBA eliminated fees on loans of $150,000 and less. More recently, the agency rolled out a credit scoring model that accurately gauges risk without the need for lenders to submit cash flow analysis on loans of $350,000 or less.
While lenders may still opt to perform this analysis as part of their own underwriting, eliminating the need to submit it to the SBA will save time and money.
Establishing a quicker, cheaper and consistent loan process model will help lenders do more small dollar lending and enhance access to capital in underserved communities.
This is a vital part of our promise of equal opportunity for all in America. A study conducted by the Urban Institute found that women and minorities are three to five times more likely to be approved for an SBA-backed loan than a traditional bank loan. In other words, if the SBA doesn’t get capital to these entrepreneurs, often no one will.
I look forward to working with our Region VIII lenders in the coming months to expand capital access by using our quick credit scoring model for smaller business loans.