SBA lending increases in 2016
Whether we like it or not, the SBA program remains the primary engine behind third party loans between a buyer and a seller of a small business. The incentives for the banks, credit unions and others to underwrite SBA loans instead of a conventional loan are simply too strong. This is because if a loan goes bad, the bank, credit union or other type of lender will get a bail out of approximately 75% of the loan from the Small Business Administration or SBA.
Now for the good news.
For 2016 it looks very positive that the total amount of money available for the SBA to make available for SBA loans will increase substantially over 2015.
Read More: Here is more information about the benefits to a seller of an SBA loan.
Through the authorization of the US Congress, the SBA’s main lending program for the 7(a) program, had lending authority for 2015 to $20.5 billion. However, for 2016 the lending authority for 2016 is $23.5 billion or an increase of $3 billion.
The 7(a) loan volume has already hit historic highs in the first few months of 2015. In 2014, the SBA approved 52,044 7(a) loans totaling $19.2 billion and an additional $1 billion was appropriated in a last-minute supplemental authorization to avoid turning small businesses away. The increase is needed to avoid a program shutdown this year as the current demand is set to surpass the initial lending cap of $18.75 billion.
Read More: Here is more information about the benefits to a buyer of an SBA loan.
All this is good news for the economy and the small business community. Since the 7(a) program is funded entirely through fees paid by borrowers and participating SBA lenders, the increase of this authorization means there is no subsequent cost to taxpayers.
If you have questions about an SBA loan to buy or sell your business call Andrew Rogerson on 916 570-2674.
The article SBA lending increases in 2016 first appeared on Andrew Rogerson and Rogerson Business Services by Andrew Rogerson
