The Small Business Administration reported a significant increase in financing support for small businesses and disaster-affected areas during the fiscal year ending Sept. 30. The agency backed a total of $56 billion in financing, marking a 7% increase from the previous year. This growth was primarily attributed to a rise in smaller loans, as highlighted in the agency's annual Capital Impact report.
In a notable milestone, the SBA distributed over 100,000 financings to small businesses for the first time since 2008, representing a 22% increase from fiscal 2023 and a 50% surge over 2020. While the SBA does not directly provide loans, except in disaster-related cases, it collaborates with lenders to facilitate the distribution of loans to small businesses, offering more favorable rates compared to traditional loans.
SBA Administrator Isabel Casillas Guzman emphasized the critical role of capital for entrepreneurs, noting that the agency's support through loans, investments, and surety bond guarantees has been instrumental in driving the economic recovery following the COVID-19 crisis.
A significant portion of the loans backed by the SBA were small dollar loans, a key priority for the agency. The report revealed that over 38,000 7(a) loans under $150,000 were supported, totaling $2.7 billion. This figure represents a doubling from the amount of small dollar loans in 2020 and a one-third increase from 2023.
The SBA also implemented a rule aimed at simplifying and streamlining lending criteria for all lenders, while enhancing its network of SBA lenders to expand small businesses' access to small-dollar loans, thereby reducing reliance on high-interest lending options like credit cards.
Furthermore, the SBA placed a particular focus on supporting Black-, Latino-, and women-owned businesses. During the fiscal year, the agency facilitated the distribution of 5,200 loans totaling $1.5 billion to Black-owned businesses, 9,600 loans amounting to $3.3 billion to Latino-owned businesses, and 15,500 loans worth $5.6 billion to majority women-owned businesses.
