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Entrepreneurs found an extra $1.5 billion worth of SBA financing in 2000 . . . and experts say that's a bad thing?

This story appears in the June 2001 issue of Entrepreneur. Subscribe »

Ok, so the gradual increase in SBA lending might not show the kind of stellar growth the financial community has come to know and demand. Given the current market, however, it should be comforting just to know Uncle Sam is still around. The numbers for 2000 show an upward trend, with total SBA-backed financing, including loans and venture capital, reaching $17.96 billion in the fiscal year. That's an increase of more than $1.5 billion over 1999. Of that figure, SBA-approved loans accounted for $12.37 billion.

Those are respectable numbers, considering how much money was available to small businesses from other sources in 2000. But even the SBA's Mike Stamler characterizes the growth as "small," particularly when compared with the jumps witnessed in the early '90s, when there were fewer commercial institutions making loans to small businesses. Today, commercial banks are adjusting their loan standards to increase small-business lending, and entrepreneurs are enjoying more borrowing options and tend to go to the SBA only when they can't qualify for a nonguaranteed conventional loan, says Stamler. He calls the SBA the lender of next, if not last, resort.

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