Small Business Financing and Franchise Financing Blog

More Money for Small Business?

Monday, January 25

It is no secret that the Small Business Administration is not lending as much as it used to. It used to be that a decent percentage of our 401(k) Small Business Financing clients were securing our services in conjunction with an SBA loan. Over the last year, though, this has changed dramatically.

We hardly see people coming to us with the thought that an SBA loan will be a part of their financing package, and, even less do we see people who already have SBA financing in place.

This all may change, though, with new initiatives by the Obama Administration to broaden the Troubled Asset Relief Program. According to BusinessWeek.com (see Obama’s New Push to Help Small Business Get Loans) these initiatives will “lower the cost of capital for small banks and community development financial institutions that present plans to the Small Business Administration for increased small business lending through the SBA’s flagship 504 and 7(a) programs. It will also more than double the maximum size limit of some of its guaranteed loans to small business owners.”

This is all great news; however, we are wondering what, if anything, this will mean for lenders looking for smaller amounts. It used to be that we could refer clients to our lending partners to secure a loan of $75,000 - $100,000. Not anymore. Now all of our partners tell us that the SBA is practically refusing any requests for less than $250,000.

What about the true small business owner?

Fortunately, some thought has gone into these smaller loans. Microloans, which are popular for start-ups and struggling businesses, will see an increase in its maximum amount from $35,000 to $50,000.

Our hope is that this is a sign of things to come: more money for the prospective small business owner – and a jumpstart on the US economy.