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Breaking Barriers in Small Business Lending: SBA's Latest Move

 


SBA
SBA Administrator Isabella Casillas Guzmán Celebrate 70 Years of Supporting Kansas Small Businesses


In a move that could prove pivotal for America's small business landscape, the U.S. Small Business Administration (SBA) is establishing a first-of-its-kind federal advisory committee dedicated to small-business lending. This announcement, made during a White House summit on Tuesday, marks a significant step towards ensuring the voices of entrepreneurs are heard and their concerns addressed when it comes to securing crucial funding.


SBA Administrator Isabel Casillas Guzman emphasized the committee's role in "keeping up with changes in the sector and fine-tuning existing programs." By directly engaging lending experts, including small-business owners themselves, the SBA aims to bridge the gap between policy and the realities faced by entrepreneurs seeking loans.

Guzman acknowledged the persistent challenge of small-dollar lending, loans typically under $150,000 often deemed less attractive by traditional lenders. Referencing the success story of Jeni's Splendid Ice Cream – a business that thrived with the help of a $35,000 SBA loan – she highlighted the committee's focus on empowering "entrepreneurs who create ideas... to grow organically in the marketplace."


This initiative comes on the heels of the SBA's August reforms, which expanded its lending network to include new fintech and non-bank entities. The agency has already witnessed positive results, with small-dollar loans under $50,000 and $500,000 increasing by 20% and 14% respectively within just 75 days of implementing the changes.

Despite a record-breaking year for the SBA, with nearly $35 billion deployed through its signature lending programs in the past fiscal year, access to capital remains a major obstacle for many entrepreneurs. An October survey by Goldman Sachs revealed that 78% of small-business owners harbor concerns about securing funding.




The SBA, however, remains undeterred. Guzman emphasized their commitment to "not only simplifying our products, but also expanding our distribution network." This includes partnering with community banks and leveraging technology to streamline processes for both lenders and borrowers.


The creation of this advisory committee marks a promising step towards a more inclusive and responsive small-business lending ecosystem. By giving entrepreneurs a seat at the table, the SBA is demonstrating its commitment to fostering an environment where innovation and growth can flourish. This is not just about numbers on a balance sheet; it's about empowering the dreams and ambitions of America's entrepreneurial spirit.


Key Takeaways:

  • The SBA is forming a new federal advisory committee focused on small-business lending.

  • The committee will include small-business owners, lending experts, and other stakeholders.

  • The goal is to improve access to capital for entrepreneurs, particularly through small-dollar loans.

  • This initiative builds on the SBA's recent reforms, which have already shown positive results.

  • The SBA remains committed to simplifying its products and expanding its lending network.


 


Sources:

  • Inc. Magazine: "Details Emerge on the SBA's New Small-Business Lending Advisory Committee: Entrepreneurs to Get a Seat at the Table"

  • U.S. Small Business Administration: "SBA Administrator Guzman Announces Two Federal Advisory Committees to Accelerate American Innovation and Access to Capital for Small Businesses and Startups"

  • Goldman Sachs 10,000 Small Businesses Voices: "October 2023 Small Business Sentiment Survey"

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