Looking Ahead for the SBA

April 13, 2006

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Reductions in staffing and funding are forcing the SBA to redistribute much of the administrative burdens for the loan guarantee process to the lender. The SBA places the burden on the private lending institution to convince the agency that a loan is worthwhile; the agency avoids taking an affirmative role in investigating or developing a loan application. A significant portion of the SBA's efforts are currently being directed at educating lenders in how to implement and administer SBA guarantee programs.

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Because many commercial lenders may not be willing to devote a great amount of additional time and expense to secure an SBA guarantee on a small commercial loan, the administrative burden will eventually fall upon the small business applicant. This trend reinforces the need to develop and submit a strong business plan to the lender and to take an affirmative role in packaging an application.

Finally, the SBA's turbulent political history makes its continued existence, and the availability of any specific programs, subject to almost constant question. Whether the programs we describe will survive government funding reductions, and whether sufficient funds will remain available to meet demand, seems to be perpetually uncertain.