The future of the SBA and the 7(a) program

Many small businesses in America benefit from the Small Business Administration. They provide all sorts of services, from coaching and mentorship to development help and even financing, the SBA has been a friend of American industry since its inception in 1953 when President Dwight Eisenhower signed this agency into existence. Since then, small businesses have been taking advantage of what it has to offer them.

Since the SBA has had such a solid history among American businesses we should make sure that the agency continues to exist for generations to come. By looking recent events, we can see the SBA’s standing with the American public and Congress and attempt to predict what the future might hold for the agency and some of its most popular programs.

No discussion of the SBA could be complete without mentioning its numerous loan programs. The most popular of these is the SBA 7(a) loan program. The SBA guarantees different types of loans through the program – Express loans being one of the more popular – to small businesses. An intermediary actually loans the capital, but the SBA promises that if the business defaults they will repay at least a portion of the loan to the financial institution.

The SBA in the news

The SBA has been in the news quite a bit recently because of all the natural disasters. If we consider the forest fires in California earlier this year, tornadoes in the Midwest, the more recent earthquakes and now the hurricane in New Orleans, we can see the SBA hard at work to help these communities recover. The SBA often opens regional offices in areas affected by natural disasters. In fact, the agency has a specific office dedicated to this – the Office of Disaster Assistance. Through this office, the SBA provides disaster loans – loans specifically for businesses rebuilding from these kinds of emergencies – in addition to providing whatever other kinds of assistance they can so that the local economy can get back on its feet. Disaster loans are similar to Express loans in that they are a specific part of the larger loan program but have their own criteria and purpose.

These offices are open for a few weeks to a few months, just long enough for things to get put back together. This is of course a popular function of the agency, something that most Americans would support. While the Pew Research Center offers quite a bit of polling on public approval of the government, including different federal agencies and all three branches of the government, they did not specifically include the SBA in this. However, we can see by looking at the results that despite historic polarization and bitterness in our politics, there are still a few agencies that are perceived as trustworthy and nonpartisan. Among them would be the Postal Service, the National Parks, and even the Centers for Disease Control. We can imagine that the SBA would fit much more closely in this group rather than with agencies disliked by the public do to its mission and founding values.

The SBA has also received attention recently for its efforts at lobbying Congress. There is a cap on the size of 7(a) loans of $5,000,000. SBA Express loans fall under this, but they are currently capped at $350,000. The SBA successfully lobbied Congress last year to have these caps raised and is in the process of doing so again this year. The SBA would also like to raise the interest rates they charge, which they argue is necessary to keep the program solvent for the long run.

Overall, news coverage of the SBA has been somewhat positive recently. Business owners like to see the SBA lobbying Congress in their interests, even when it is in pursuit of something as simple as the ability to raise the caps on their loans slightly. While raising interest rates and fees is never popular, business owners should understand that this is a general trend in the financial markets that the SBA is as beholden to as any other financial institution.

Seeing the SBA’s response to the recent disasters this year – of which there have been plenty – likewise ought to build public trust in the agency. While not everyone owns a small business, most people know someone who does and patronize local businesses in some way. This alone is probably enough to keep the agency popular as it responds to disasters and continues to represent the interests of American small businesses. While it may be difficult to find polling that specifically mentions the agency, it is not hard to imagine that a majority of the American public does in fact continue to support its existence and mission at a rate much higher than they do the government at large.

Small business owners should continue to be vocal about their support of the agency and the loans it provides, especially unique loan programs like the Express loans and Disaster loans that are difficult to find from commercial lenders. By unequivocally supporting the agency and being vocal about their own interests, business owners will ensure that it continues to exist long into the future for both them and entrepreneurs yet to come. It is only fair that we ensure that generations of business owners to come will be able to benefit from the same sorts of programs, loans, and mentorship that we were able to.