Karen Mills, administrator of the Small Business Administration (SBA), reassured a crowd of New England lenders and business owners that the SBA was better than ever, armed with resources from last September’s Small Business Jobs Act and a renewed commitment to making the SBA as efficient and fraud-proof as possible.
Mills and other officials were touring Boston’s SBA offices Friday to help spread the word about the act, which the SBA calls "the most significant piece of small business legislation in more than a decade." Among other things, it increased loan limits from $2 million to $5 million for the SBA’s most popular lending program, and provided more than $12 billion in lending support.
The SBA immediately deployed as much of that money as possible, Mills told Banker & Tradesman, and that led to the agency’s strongest quarter ever at the end of last year. Nationally, the SBA made $10.5 billion loans in the fourth quarter 2010, bringing the year’s total to $17.1 billion – a 30 percent increase over year-end totals for 2009.
In Massachusetts, the agency made 669 loans worth $166 million during the fourth quarter. Connecticut saw 251 loans worth $100 million for the same period.
With an infusion of cash, the SBA has ramped up its lending considerably since the start of the recession. But federal budget proposals this year show a return to pre-recession levels of funding, and Mills acknowledged that weekly average volumes have accordingly scaled back to pre-2008 numbers.
But economic turmoil and the SBA’s spate of intense activity has drawn hundreds of lenders to work with the agency in the past few years, she told Banker & Tradesman, and they’re finding a more efficient SBA, with a bigger variety of programs.
The Small Business Jobs Act carries two new, lower-dollar loan programs: Small Business Advantage, which encourages SBA lenders to make small loans to businesses in underserved markets, and Community Advantage, which aims to increase the number of lenders who work in underserved communities. Both programs have maximum loan volumes of $250,000, and come with 85 percent guarantees from the SBA.
Another major initiative during her tenure has been to flush out fraud and abuse of SBA programs. More eyes are focused on getting up-front information from businesses and lenders to make sure they’re qualified, as well as much more monitoring of SBA beneficiaries such as small businesses that do government contract work through the agency. And when the SBA finds wrongdoing, it issues enforcement orders to put a stop to it. All of which helps create confidence in the agency’s ability to monitor its participants and prevent waste of the agency’s resources.
"It’s a new attitude, a new tone," she said.
Boston was just one stop for SBA officials on tour to promote the Small Business Jobs Act, where lenders and business owners could bring their questions and concerns to SBA personnel directly, and gain instruction on the agency’s programs. Mills told Banker & Tradesman that this kind of face-to-face contact was important to create a dialogue with SBA participants, and similar on-site visits had actually helped the agency get its ideas for new programs in the first place.
During her speech, she had words of encouragement for small business owners: "When [President Barack Obama] talks about out-innovating and out-competing … this is what he’s talking about – he’s talking about small business," she said. "So if we are going to keep this country vibrant, it’s because we’ll give small businesses the tools they need."
