Metro Creative Connection
Mon Nov 1, 2021 2:10 PM
In FY2021, loan programs 7 (a) and 504 provided more than 61,000 loans, but gaps remain in access to capital for underserved communities
U.S. Small Business Administration Trustee Isabella Casillas Guzman announced the agency reached $ 44.8 billion in funding for small businesses through more than 61,000 traditional loans for fiscal 2021 .
âIn the midst of a once-in-a-generation pandemic, the SBA’s mission-driven team has made a record number of traditional SBA loans to small businesses across our nation – in addition to more than $ 1.1 trillion. dollars in COVID-related relief since the start of the pandemic, âGuzman said. âWhile progress has been made, our data also tells a deeper story: historic inequalities in access to capital persist, and we need to do more to lower the barriers to entry of opportunities for all of our entrepreneurs. We will continue to build on our impactful programs to meet small businesses where they are and connect them with the resources they need to thrive. “
Patrick Kelley, Associate Administrator of the Access to Capital Office, said: âThe SBA continues to make progress in helping small businesses access much-needed capital, but there is still a long way to go. Our Flexible, Low Interest 504 Loan Program increased lending volume by 41%, and the SBA team is already hard at work for fiscal 2022 to support job and business growth. Across the country.
Buffalo District Office District Manager Franklin Sciortino added, âWe are grateful to our lending partners in the Buffalo District. They not only supported our disaster recovery efforts, but also remained committed to our traditional lending programs to provide access to capital to so many small local businesses. We look forward to strengthening relationships with our partners to reach even more small businesses in the coming year. “
Global funding and impact
Under Guzman’s watch, the SBA said, the agency “has made it a priority to increase access to capital for business owners across the country, especially in traditionally underserved communities.” Data on traditional loans for fiscal year 2021 includes:
â $ 36.5 billion in 7 (a) loans: Almost 52,000 7 (a) loans worth over $ 36.5 billion have been made to small businesses. Lenders reported that minority business owners received nearly $ 11 billion in 7 (a) loans or 30% of the SBA’s total 7 (a) portfolio. The data also shows that women-owned businesses received nearly $ 5 billion in FY21, while veteran-owned businesses received $ 1.2 billion.
â $ 8.2 billion in 504 loans: Working with Authorized Development Corporations (CDCs), the SBA’s 504 program granted 9,600 loans worth more than $ 8.2 billion to small enterprises, thereby fully depleting the funding authorization for the first time in the history of the program. Minority business owners received nearly $ 1.88 billion in loans, or 23% of the total portfolio of 504. In FY21, the program also provided over $ 712 million in loans to women-owned businesses and increased its support to small rural businesses by almost 33%.
â $ 71.8 million in microcredit funding: In fiscal year 2021, $ 71.8 million in microcredit funding was provided to nearly 4,400 small businesses. Forty-one percent of those loans went to underserved communities, including small businesses owned by Hispanics and blacks.
Addressing the equity challenges that persist across the small business economy
The SBA said: âDespite significant progress in its traditional lending programs, the agency is well aware of the gaps that persist for some communities in access to capital. SBA’s existing loan programs play an important role in credit markets for small businesses, especially those with collateral and proven income that are denied a loan by a commercial bank or often lack relationships with lenders. established.
âOver the past five years, loans to smaller borrowers through SBA-backed Loan 7 (a), Express and Community Advantage have declined by over 45%. However, the decline in the proportion of small loans is not unique to SBA loan portfolios. Federal Deposit Insurance Corporation (FDIC) data on commercial small business loans by regulated banks shows an overall 3% drop (translating to over 600,000 loans) in the proportion of loans below 100,000 $. This lack of lenders’ appetite for small loan amounts has resulted in disproportionate impacts on minority business owners. Non-Hispanic black-owned businesses and businesses with sales of $ 100,000 or less were half as likely as non-Hispanic white-owned businesses to obtain bank funds (23%, 24%) , and Latino-owned businesses were also lower (34%).
âClosing the systemic gap in access to capital for smaller, underserved businesses has been the northern star of Administrator Guzman and will continue to be a top priority for the SBA over the course of the year. exercise 22 and beyond. “
For more information on SBA loan programs, financial aid, and other services, visit www.sba.gov.