SBA launches renewed, simplified loan products

Over the past two years, the Small Business Administration has been working directly with the private and public sector lending community to prepare loan products that are more responsive to the needs of small business.

In particular, we exchange ideas with banks, credit unions, certified development companies, chambers and various lender associations, resulting in products that simplify and speed up loan processing by reducing paperwork and other redundancies.

Starting in June, SBA revised portions of the Small Loan Advantage, or SLA, program simplifying the application process, speeding up approvals, expanding the number of qualified lenders and increasing the loan cap. The SLA program is structured to encourage lenders to make small-dollar loans of $350,000 or less, which often benefit small businesses in underserved markets. The SLA program simplifies and streamlines paperwork making it more cost-effective for lenders. We expect the demand for this new product in Colorado to increase as we begin to market it to our lending partners throughout the state

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One of our most popular lending programs in Colorado is SBAExpress. Providing a 50 percent guarantee, it gives small-business borrowers an accelerated turnaround time for SBA’s review. Businesses receive a response to their applications within 36 hours. In addition, lower interest rates are often available. In Colorado for this fiscal year, as of June 15, SBA has guaranteed 323 Express Loans for $22.8 million.

It can be tough for small businesses to manage their cash flow. They’ve got payrolls to meet, inventory to buy and customers to please. A revolving line of credit could help small businesses manage their cash cycle. This is why SBA also re-engineered the Capital Lines, or CAPLines, program.

Today, small businesses often compete for contracts to help them scale up and create jobs. One of the biggest “growing pains” associated with winning a new contract is that the business often does not have the necessary cash on hand to hire workers and buy materials to help fulfill the order. CAPLines provides a path for these small businesses to finance contracts while avoiding high interest rates through an SBA revolving line of credit.

CAPLines allows banks to use more of their own streamlined processes, and we are seeing volumes that are up 220 percent.

In addition, small businesses that use the CAPLines program will benefit from the new increased SBA 7(a) loan limit of $5 million, which went into effect with the Small Business Jobs Act. These larger loan sizes will help small businesses that are poised to win bigger contracts, creating jobs as a result and an economy that’s built to last. In Colorado, as of June 15, SBA has guaranteed $8.8 million in CAPLines, and we expect an increase going into the fall quarter.

Everyone knows how important small businesses are to the economy. Over the last 15 years, small businesses created two out of every three net new private-sector jobs. Half of all American workers own or work for a small business. And we’re counting on small businesses to drive our economy to a full recovery.

SBA is here to help, and we are constantly looking for ways to provide access and opportunity to the American small business owner. SBA loans are grounded by a smart public-private partnership and that’s a powerful bang for the taxpayer buck.

Dan Hannaher is the Small Business Administration’s Region VIII administrator.