The U.S. Small Business Administration announced it is streamlining loan packages to require less paperwork. Today most loan packages received by the SBA from lenders are incomplete and require rework, and the SBA’s reforms intend to improve this. The SBA commits to responding with a decision within 45 days of receiving loan packages that are complete.
The SBA also is launching or enhancing loan programs to reach out to specific underserved communities and groups, including rural, veteran and minority business owners. It continues to extend the Express loan program which is itself a streamlined loan program.
A few months ago I interviewed SBA Administrator Steve Preston on Small Business Trends radio. He comes from the private sector. He impressed me with his focus on making the SBA goal-oriented and more responsive to small businesses and the public.
During the interview I remember thinking what a challenge it must be to try to reform a monolithic organization like a Federal agency — especially when you are used to private business where the chief executive can make things move faster.
Moving a governmental agency must be the equivalent of turning a supertanker. Yet, the SBA has managed to double the number of loans processed annually compared to five years ago. And the SBA has improved its Web outreach considerably over the past year. Its website now has easier-to-use tools and resources.
The SBA has taken political heat during its history — the issues may change, but there’s always some hot potato. However, all things considered, we are better off for having an agency that reports to the President supporting the nation’s small businesses. Along with a free enterprise system, our SBA is one of the reasons that entrepreneurship has flourished in the United States.
See the SBA press release for more on the reforms.
Anita, you are so correct when you speak to the SBA’s role in Americana entrepreneurship. Current capital pools would dry up very quickly without the lending repayment guarantee provided by the fed. I speak from experience. I took down two (2) separate SBA 7a loans for a total of $295K and believe you me, no bank would have worked with my young company without Uncle Sam backing the deal.
The other side of the coin should also be discussed. With federal guarantees in place, when a small business comes upon rough times, most lenders have no financial incentive to work through the difficulties with the borrower. With 90 cents on the dollar guaranteed by the feds, most bankers bale on their customer and just cash out.
Overall, our economy owes a great deal to the hard working individuals at the SBA for processing lending guarantees that provides liquidity to our marketplace.
Thanks, Neal, for pointing out the downside of government guarantees. That’s why it is so important for the SBA to focus more of its efforts on supporting entrepreneurs in other ways, such as through education outreach. I think the lending should be but one part of what the SBA does — and it is just one part, but we tend to immediately think of loans when we think of the SBA.
Anita you are so correct. I submit that mandatory attendance of education outreach extend to include the very same commercial bankers who took the original deal. By doing this, all original decision makers will be in the same circle, under the same roof at the same time. I would love to be a fly on the wall listening in to that repartee.
There is no private market proxy for the SBA, they provide an invaluable service. However, the grease needs to be applied to short-term minded lenders who covet a C.Y.A. mentality with no appreciation for the personal risk assumed by the ordinary entrepreneur. Personally, I would delight watching a soft-skin banker work a real days pay.