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SBA Lending Marches On Post-Sequester, But Anxieties Linger


UPDATE: The Small Business Lending and Investment Summit was postponed due to an expected snowstorm in the D.C. region, and it's rescheduled date is still pending.

The Small Business Administration isn't expecting to slow down its pace of guaranteeing loans in the wake of the sequester, says outgoing SBA-chief Karen Mills. While the agency's loan-guarantee fund expects to lose $16.68 million, the SBA has never reached its cap, despite recent record-lending years.

Meanwhile, a handful of uncertainties confront the SBA, including the potential revival of a popular commercial-real-estate-refinance program and a potential resolution to the sequester fighting, which make it difficult to predict where SBA lending will be a year from now.

Amid the uncertainty, a group of small-business lenders are seeking to call attention to the importance of lending programs backed by the SBA at a summit in Washington, D.C., Wednesday.

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"SBA loans have gone from being the lender of last resort to the lender of only resort for many small businesses in this country," says Beth Solomon, the president and CEO of the National Association of Development Companies, the trade association for organizations providing financing through the SBA’s 504 loan program. The 504 loan program provides qualified small businesses with long-term, fixed-rate loans used for fixed assets, building acquisition or expansion and renovations.

NADC is coordinating Wednesday’s third annual Small-Business Lending and Investment Summit, which will draw about 150 attendees, including leaders from International Franchise Association, National Small Business Association, National Association of Government Guaranteed Lenders and Small Business Investor Alliance.

Also, the organizations will be joined by the founders of Port City Brewing Company, an Alexandria, Va.-based beer-brewing company, and Cork DC, a wine bar in Washington, D.C., which both received funding from the 504 loan program.

Related: Karen Mills on the SBA: Successor Needs to Get the Word Out

Due to sequestration, the forced federal budget cuts that took effect Friday, the SBA is expected to lose the ability to guarantee 1,928 fewer loans totaling $902 million in capital in the hands of entrepreneurs.

However, even in the recent record-lending years for the SBA, the agency has not bumped into its legislated cap, Mills said, speaking in a meeting with reporters in New York last month. The agency expects to meet loan demand because the popular 504 loan program was recently retired, freeing up available lending capacity for its other programs, she said.

But some small-business advocates would like to see the 504 refinance program brought back.

U.S. Sen. Mary L. Landrieu (D, La.), chair of the Senate Committee on Small Business and Entrepreneurship, and Sen. Jeanne Shaheen (D, N.H.), a senior member of the committee, have advocated for extending this temporary program that allowed small-business owners to use it to refinance mortgage debt. Landrieu will attend the lending summit Wednesday to press for an extension of the 504 mortgage-refinance program, called the Commercial Real Estate and Economic Development (CREED) Act.

"The overall atmosphere in the small-business community is uncertain regarding SBA lending," says Solomon, and that results in business owners putting the brakes on expansion plans and holding off on making the next hire.

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Has your business ever received a SBA loan and if so, how did it help your business? Leave a message below and let us know.

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