Business lending momentum continues in FY18

Local loan volume reaches more than $512M, rural lending at $87 million


Submitted by SBA

CLEVELAND – In FY18, U.S. Small Business Administration-backed rural lending dollars increased by 63 percent, with most loans going to manufacturers, driving job creation and economic development in rural northern Ohio. These numbers, coupled with the SBA Cleveland Office’s overall loan volume, demonstrate that entrepreneurs have greater accessibility to the capital needed to succeed and thrive via the SBA’s 7(a) and 504 loan programs.

The SBA’s Cleveland District Office approved 1,811 loans in the 7(a) and 504 loan programs in FY18. Combined, these programs provided $512 million to small businesses, a 5.7 percent increase from the Cleveland District’s FY 17 (7a) and 504 loan program amounts of $484 million.

“One of SBA’s top goals is to get more capital into the hands of entrepreneurs who would otherwise not be able to access loans at reasonable rates,” said Gil Goldberg, the SBA’s Cleveland district director. “Our lending numbers show that we are improving investment opportunities in rural areas and promoting stronger business economies throughout northern Ohio.”

Nationally, the SBA announced FY18 lending numbers showing that it guaranteed over $30 billion through more than 72,000 approved loans to small businesses that otherwise would not have had access to capital.
“We are providing resources and access to capital for small businesses through SBA’s 7(a) and 504 loan programs,” said Rob Scott, the SBA’s Region V Administrator. “We’ve reduced the time it takes to process loans and changed over to electronic processing. We believe that these efficiencies and the President’s tax cuts and deregulatory actions will help more small businesses grow and prosper in the coming year.”
In FY18 there were approximately 60,353 7(a) loans made nationwide, with a total dollar amount of $25.37 billion. The 7(a) program is SBA’s flagship program, which offers guarantees on loans to small businesses of up to $5 million on reasonable terms and conditions. 7(a) loans are commonly used for acquiring land, purchasing equipment, or working capital.
The SBA’s 504 loan program had another year of high performance for lending, with 5,874 loans made for a total dollar amount of over $4.75 billion. In FY18 SBA launched the 25-year Debenture, which offers an extra 60 months of financing at a fixed rate for small businesses. Since its introduction in April, over 1,000 debentures had been sold by the end of September.
In FY18 there was significant growth in the SBA’s smaller loans, including a record volume of dollars lent in the Microloan and Community Advantage Programs. Specifically, over 5,000 loans were approved for over $72 million in the Microloan program and over 1,000 loans for over $150 million in SBA’s Community Advantage program.
The SBA continued to innovate and improve processes by leveraging enhanced technologies. Lender Match is an SBA technology platform that gives entrepreneurs the ability to complete a quick online form, without registration or cost, and be connected with an approved SBA lender within 48 hours. To date, Lender Match has generated 3.6 million leads on behalf of small businesses to our lenders and over 160,000 unique borrowers have been contacted by lenders with financing options.
Another technological innovation was the development of the SBA’s Franchise Directory, which was launched this year and has resulted in an over 50 percent increase in eligible franchise brands. There are currently 3,192 brands on the Franchise Directory. When the directory was first published in October 2017 there were only 2,034 brands. In FY18, SBA has seen a year over year increase of over 21 percent in 7(a) and 504 dollars going to franchises.

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THE 7(A) LOAN PROGRAM is the SBA’s primary program for providing financial assistance to small businesses and offers guarantees on loans to small businesses of up to $5 million on reasonable terms and conditions. 7(a) loans are commonly used for acquiring land, purchasing equipment or working capital.

504 LOAN The CDC/504 loan program helps small businesses acquire fixed assets to promote economic development in the form of long-term fixed rate financing for fixed assets on reasonable terms. Under this program, the SBA authorizes CDCs (Certified Development Companies) to provide financing to small businesses with the help of third-party lenders (typically banks). The maximum loan amount is generally $5 million; however, certain eligible energy-efficient or manufacturing projects may qualify for more than one 504 loan up to $5.5 million each.