SBA-backed loans continued to rebound in fiscal year 2010

Loans guaranteed by the Small Business Administration (SBA) to small businesses and entrepreneurs continued to rebound in fiscal year 2010 as a result of the loan enhancements established under the American Recovery and Reinvestment Act of 2009 and extended last week in the Small Business Jobs Act of 2010. The enhancements allowed SBA to raise the guarantee on its 7(a) loans to 90 percent and waive fees on its 7(a) and 504 loans.

During fiscal year 2010, which ended Sept. 30, SBA supported more than $22 billion (54,833 loans) in lending to small businesses through its two largest loan programs compared with more than $17 billion (47,897 loans) during fiscal year 2009. The average weekly loan volume for fiscal year 2010 was $333 million—29 percent more than the $258 million for fiscal year 2009.

"SBA-backed lending continued the rebound started in fiscal year 2009 as a result of the fee reductions and higher loan guarantees made available last year under the Recovery Act," says SBA Administrator Karen Mills. "The success of these loan enhancements has meant tens of thousands of small businesses have been able to get the capital they need to not just survive the recession but to grow and create much-needed jobs in communities across the U.S.

"However, there still is work to do," she continues. "We know small businesses still are facing challenges when it comes to getting loans, and that's why it is important that these loan enhancements were extended last week in the Small Business Jobs Act, which gives SBA the resources to approve another $14 billion in small-business lending."

November 2009 represented the highest single-month loan volume in fiscal year 2010 with $2.18 billion in loans. This also was SBA's highest single-month loan volume since September 2002, which was $2.34 billion.

As a result of the credit crunch, SBA lending dropped significantly during fall 2008 and early 2009. For the seven weeks before the American Recovery and Reinvestment Act was signed, SBA's average weekly dollar volume was $172 million. The average weekly dollar volume from the time the Recovery Act was signed until funds were exhausted was $330 million. Approvals of SBA loans with the act's enhancements were extended four times during fiscal year 2010; funds from the final extension were exhausted in May.

The dollar volume totals for SBA loans in fiscal year 2010 do not include loans made under SBA's America's Recovery Capital (ARC) loan program. The program was available to assist viable but struggling small businesses with debt repayment. It was launched June 15, 2009, and ended Sept. 30. In all, SBA approved 8,869 ARC loans worth $286.5 million. Throughout the U.S., 1,325 lenders made ARC loans while the program was in effect, with 44 percent helping small businesses in the retail services, construction and manufacturing sectors. SBA had estimated it could approve as many as 10,000 ARC loans with the $255 million subsidy provided in the American Recovery and Reinvestment Act.

Date : 10/8/2010