“As the U.S. economy improved in the past year, banks opened the spigots again, and according to the SBA report, small business lending is beginning to approach the 2008 record ($711.5 billion in loans outstanding), missing the pre-recession peak by $124 billion,” said a credit expert in a new article in Fox’s Business Center.
According to the article, two of the five reasons for the return of small business lending are due to the Small Business Administration. This year’s recent changes to the SBA program streamlined the document process for SBA lenders and commercial real estate borrowers. Also a catalyst, the SBA’s decision to lower fees and their start of accepting electronic loan applications.
“SBA small-business lending products, such as 7(a) loans and Small Business Express loans, made it less risky for banks to put money back out on the street for small businesses. Thus, the lending institutions became more willing to grant entrepreneurs’ funding requests,” says Arora.
Another boost for small business lending came from the secondary market’s increase for SBA loans. This allowed smaller lenders to gain a profit by selling the loans within that market.
To read the full article and see the other 3 reason for the return to small business lending please click here.