SBA priorities for 2016

According to reports, small business loans will be a priority this year at the SBA.

In hearings before the House Small Business Committee earlier in January, the Small Business Administration (SBA) made clear some of its priorities for 2016.

No SBA 7(a) loan program shutdown anticipated this year

Last year, the SBA's 7(a) loan program backed an all-time record number of loans totaling $23.6 billion and had to shut down for a period of time during the summer because the program reached its authorization limit early.

Lending this year is already on track to surpass last year's record-setting pace, but this year Congress and the SBA hope to avoid last year's problems by taking two steps. First, Congress has raised the SBA's 7(a) loan program limit to $26.5 billion, and second, the SBA has vowed it will let Congress know ahead of schedule if it anticipates exceeding its lending limit.

504 loan program to refinance mortgages relaunched

In 2012, in excess of 2,700 small business owners refinanced their owner-occupied commercial real estate mortgages through the SBA's 504 loan program. By refinancing this debt, capital was made available for hiring and investing in strategies to grow their businesses. The program has lagged since 2012. Seeking to replicate the successes of 2012, the SBA will relaunch the program by June 2016, at the latest, making utilization of the program a priority in 2016.

Making small loans to be a top priority

In 2015, the number of SBA loans totaling $150,000 or less rose by 22 percent. In 2015, the SBA hopes to increase this number even more. According to the SBA's associate administrator of capital access, Ann Marie Mehlman, "[s]tudies show that nearly 90 percent of business loan applications are for these small loans, and with gaps in the lending marketplace, many of the nation's underserved small businesses often rely upon high-cost alternatives."

To incentivize lenders to make loans of $150,000 or less, it is eliminating fees on 7(a) program loans under that amount and extending the Community Advantage pilot program to 2020. The Community Advantage pilot program requires lenders to make a certain percentage of its loans in underserved areas.

Attracting more lenders to SBA-backed programs

In 2016, the SBA will focus on brining more lenders into SBA-backed programs. It intends to accomplish this by streamlining SBA loan processes. According to Mehlman, the SBA has "reduced the cost, time and uncertainty in submitting a loan guaranty application" and enrolled hundreds of lenders in SBA One, the SBA's online guarantee loan application tool. Furthermore, the SBA stated it will work to simplify and clarify other of its requirements to make it more attractive to lenders and eligible businesses.

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