Smaller loans still an issue for SBA

10/5/2011

Small monetary loans to small businesses - such as those for less than $150,000 - are critical to a growing business for hiring, equipment purchases and other capital to help it expand, The Wall Street Journal reports.

However, the news source notes that SBA loans of less than $150,000 were down in 2011, dropping from 34,238 last year to 29,682.

"We've had an extremely successful year," said SBA administrator Karen Mills, as quoted by the news source. "But we still have some gaps. We're not back in [the terms of] small loans and loans to underserved markets."

The primary reason for the gap? The amount of work it takes for a bank to underwrite a smaller loan is just as cumbersome as it is to write a large one. As larger businesses applied for higher loan amounts, some small companies were forgotten.

In order to assist in streamlining the extensive paperwork involved, the SBA unveiled the Community Advantage and Small Loan Advantage programs earlier this year, which offer fast approval time, minimal paperwork and government guarantees of up to 85 percent.

The Litchfield Independent Review reports that the government recently awarded the Minnesota Department of Employment and Economic Development $15.5 million for loans of up to $150,000, as part of the Small Business Jobs Act.