Small Business Administration lending hit record levels in 2011

Small Business Administration lending in fiscal year 2011 reached the highest level in the agency’s history.

During the fiscal year, which ended in Sept. 30, SBA loan approvals supported $30.5 billion in lending to small businesses and startups through its two largest loan programs, compared to $22.6 billion in fiscal year 2010 and $17.9 billion in fiscal year 2009. The previous record –$28.5 billion– was established in fiscal year 2007.

The first quarter of 2011, at more than $12 billion supported, was the most active single quarter ever for SBA-backed loans, with more than four times the dollar volume of the same quarter in 2009 –the first three months of the recession– and more than double the volume of any quarter over the past four years.

“SBA lending continued the upward trend we saw last year,” says SBA Administrator Karen Mills. “Due to the Small Business Jobs Act and a return to pre-recession lending levels, over 61,000 small businesses had access to capital… As SBA lending levels continue to indicate a rebound in small business lending, we will work through new programs to fill the gaps created in the marketplace.”

Mills was in Columbus Wednesday at Jeni’s Splendid Ice Creams in Clintonville, at 4247 N. High St., for a discussion with press about the small business economy. Jeni’s proved an ideal location for the discussion, as the company was founded here in 2002 with an SBA loan, and has used 10 SBA loans over the last nine years to help it grow to 10 retail locations in two states, 48 full-time employees and 260 part-time employees.

During the discussion, Mills noted that the SBA’s unprecedented first quarter was prompted by loan enhancements provided by the Small Business Jobs Act in effect at that time. Those enhancements allowed the SBA to raise the guarantee on its 7(a) loans to 90 percent and waive fees on both its 7(a) and 504 loans.

The totals for fiscal year 2011 include 53,706 loans worth $19.63 billion under the 7(a) General Business Loan program –the agency’s largest loan program– and 7,983 loans worth $4.84 billion, supporting $10.34 billion in small business lending under the 504 Certified Development Company loan program.  (The “supported” amount for 504 loans includes the SBA share and third party loans that are made by commercial lenders as part of the funding package.)

Though SBA lending has returned to pre-recession levels, Mills says there continue to be gaps in the marketplace and small businesses that need access to capital. As a result, the SBA created two new lending programs this year: Community Advantage and Small Loan Advantage.

The  programs provide steamlined applications for loans under $250,000 with the standard 7(a) guarantee to incentive lenders to make smaller-dollar loans, which often go to underserved communities.

Community Advantage also increases the points of access for small businesses by allowing “mission-focused” lenders, such as community development financial institutions (the Economic and Community Development Institute is a local CDFI) and microlending intermediaries, the ability to make 7(a) loans.

Additionally, the SBA has added 30 new lenders to the 7(a) lending program through the Community Advantage program.