WASHINGTON — The 7(a) and 504 loan programs set records with 110,275 loans approved totaling more than $20.6 billion as of Sept. 30, the end of the Small Business Administration's fiscal year.
The 7(a) loan guaranty program, which is most often used for working capital, increased the number of loans from 97,290 in FY 2006 to 99,607 loans in FY 2007, although the dollar volume declined slightly from $14.52 billion to $14.29 billion. The Certified Development Company or 504 program, used for the purchase of real estate and fixed assets, provided 10,668 loans worth $6.31 billion, up from the 9,943 loans worth $5.73 billion in FY 2006.
Although SBA does not make direct loans to small businesses, the agency's use of its guaranty authority enables commercial lenders and Certified Development Companies to make loans to small businesses they otherwise would not have made, according to SBA. The 7(a) and 504 program totals do not include an additional $2.65 billion in venture capital funding provided by SBA-licensed Small Business Investment Companies to more than 2,000 small businesses.
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Meanwhile, nearly a third of all loans went to start-ups, and a third went to minority borrowers. Loans to minority groups increased by 7%, with the largest increase coming in loans to African Americans, which increased by 23% from 7,238 to 8,903. Smaller volume increases were recorded to businesses owned by Asian Americans, Native Americans and women, while loans to Hispanics declined slightly. Overall, loans to businesses in underserved areas amounted to more than 36% of total loan approvals.
"This progress reflects the strength of our relationships with our lending and resource partners, who have been essential in providing record numbers of small business loans in each of the last six years," said SBA Administrator Steve Preston.
The agency said its loan programs have been setting records for six consecutive years and have more than doubled since fiscal 2000, from 48,313 to 110,275. During this period, SBA has approved more than 555,000 loans worth more than $107 billion to American small businesses, more than in the previous 10 years combined. Over this time, the agency's total small business loan portfolio has grown to $66.7 billion, compared to $45.9 billion at the end of FY 2002 and $62.6 billion a year ago.
Preston said SBA lending in designated Enterprise Zones, HUBZones and low and moderate income areas increased by better than 5%, more than twice the increase in lending overall.
"We remain absolutely committed to enabling small business success, particularly in underserved markets and those areas hard hit by disasters," Preston said.
There are approximately 377 SBA credit union lenders.
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