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SBA loan guarantees drop in 2008
WASHINGTON (10/31/08)—The volume of loan guarantees issued by the U.S. Small Business Administration (SBA) has been pummeled from three directions causing a nearly 30% drop in 2008. The SBA said it was caught in a “perfect storm” of tightened credit by commercial lenders, declining creditworthiness, and reduced demand for loans from small business borrowers uncertain about the future. SBA Acting Administrator Sandy K. Baruah said in a release Thursday that in addition to loan volume dropping almost by a third since 2007’s record year with nearly 100,000 loans approved, the dollar value has also declined. 2008 witnessed a 13% drop to $17.96 billion from $20.6 billion in 2007. The program declines began not long after the fiscal year started in October 2007, and accelerated throughout the fiscal year, the SBA reported. They represent loans made under SBA’s two primary loan programs, the 7(a) guaranteed loan program and the Certified Development Company, or 504, loan program. Baruah said he “feels strongly” that the steps taken by the Bush administration and U.S. Congress will have a positive effect on the credit situation and the economy. The SBA is conducting meetings across the country to study how better to understand how the agency can work with both lenders and small businesses during “these difficult economic times.” For more information on how SBA loans, use the resource link below.
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