WASHINGTON — For a number of reasons, 368 banks have stopped participating in the Small Business Administration's lending programs over the past two years, the agency said.

During his Jan. 22 State of the SBA Speech, Administrator Steve Preston said the losses represents a 7% decline in the number of banks that have outstanding SBA loans. Most would think it's because of the agency's fees, Preston said, but banks are actually complaining about the complexity of SBA's rules, slow turnaround times, paperwork “burdens,” and lack of support of clear assurances when banks have issues.

“There is a fundamental connection between the effectiveness of our programs and the way we deliver them,” Preston said. “A related fact is that efficiency does not have to come at the cost of effectiveness. Through smarter processes, better technology, and a more coordinated, better trained organization, you can provide better service at lower cost.”

Meanwhile, credit unions continue to partner with SBA. Nearly 400 are SBA lenders.

Preston said the agency has undergone several reforms during his 18-month tenure including a complete overhaul of the disaster assistance loan program. SBA's small business loans portfolio has grown to $76 billion in the last fiscal year, compared to $49 million in 2001.