Streamlined and Simplified: The New SBA
As a small business owner you are well aware of the Small Business Administration (SBA) and how it helps small businesses through providing access to loans and striving to ensure that small businesses receive a fair share of government contracts. Well, Karen Mills, the Administrator of the SBA, recently wrote an op-ed in The Huffington Post explaining what she calls “The New SBA”. Indeed, the main goal of the SBA that she wanted to get across was of making sure that more small businesses have the tools they need to start, build and grow their operations. One means of doing this is by increasing availability to credit. However, the last three years have experienced a weak commercial lending environment and the SBA tried to combat this by loaning out roughly $93 billion to over 170,000 small businesses. 2011 alone set records with some $30 billion lent out to over 60,000 small businesses.
Fortunately, the commercial lending markets have improved these days and funds are finding it easier to flow to eager parties. However, as we have stressed in recent weeks, loan growth is mainly in the large balance areas, e.g. loans over $1,000,000 that don’t capture the typical small business. Yes, loan growth for the more common smaller amounts are still at muted levels hurter young and cash strapped small businesses. To fight this, the “New SBA” will take a so called “More Doors, More Dollars” approach which should allow them to open up more funding to qualified community development institutions as well as streamline and improve the current loan processes. All of this should, they expect, increase small loan volume. Karen Mills continues, “For example, we created a simpler application process for our Small Loan Advantage program, the flagship 7(a) product for loans under $350,000, which we are calling SLA 2.0. We've eliminated more than 100 pages of paperwork that lenders and borrowers previously had to review and fill out. These changes have resulted in a more than 140 percent increase in SLA loans and an over 200 percent increase in the number of lenders using the program. We also are in the process of streamlining and enhancing our Community Advantage program to better serve both lenders and borrowers. In addition, in June, we simplified our disaster loan application. We streamlined the electronic loan application from 80 screen shots to just 20 screen shots. The screen shots consist of a simplified 3 to 4 page application, plus program background, privacy information and two-factor authentication. This streamlining has reduced the electronic loan application paperwork by 70% and the turn-around time for disaster loans to an average of 10 days…”
Source - Huffington Post