A Push to Open More Doors to More Dollars


America’s small businesses and entrepreneurs are the engine of our economy and one of our country’s greatest assets. Our 28 million small firms employ half of the private sector workforce and have, over the last two decades, been responsible for creating two out of every three net new private sector jobs. Today, minority-owned small businesses are one of the fastest-growing segments of our economy.

In my role as Deputy Administrator, I’ve been privileged to travel and meet inspiring small business owners across the country–from a jewelry maker in Indianapolis who received counseling and assistance on exporting through her local Women’s Business Center, to two amazing women who own a gas and oil supplier and distributor in Kentucky, to the veteran-owned ready mix concrete company in New Orleans that started in the wake of Katrina in order to put people back to work and rebuild the city.

Small businesses such as these are the building blocks of our economy and now, more than ever, America’s small business owners require increased access to the capital and resources needed to grow their small businesses–particularly smaller dollar loans.

Through our “More Doors, More Dollars” approach, the U.S. Small Business Administration (SBA) and the Obama Administration have already taken unprecedented action to increase capital access for small businesses. Since January 2009, SBA has supported more than $111.5 billion in lending to more than 203,000 small businesses and entrepreneurs–including over 16,300 microloans (loans totaling $50,000 and under) for a total of nearly $188 million.

SBA currently works with more than 150 non-profit community based organizations (Intermediary Lenders) across the nation to make microloans available to small businesses. These organizations are dedicated to helping entrepreneurs and start-ups obtain business based-training and counseling, as well as business financing. Under SBA’s popular Microloan Program, small businesses can apply for loans of up to $50,000, although the average microloan is about $13,000. The maximum repayment period for a microloan is six years, and they can be used for working capital, or for the purchase of furniture, fixtures, supplies, materials, and equipment.

While each lender sets its own loan qualifications standards, small business owners interested in accessing or applying for a microloan can work with their closest intermediary lender to learn more about what steps they should take as they develop or grow their business and prepare to apply for a microloan. These steps can include general business training, credit repair advice, or financial literacy training, and the development of a comprehensive business plan.

In addition to our microlending efforts, SBA has created a simpler application process for our Small Loan Advantage (SLA) program, the flagship 7(a) product for loans under $350,000, and has eliminated more than 100 pages of paperwork for lenders and borrowers.

These changes have resulted in a more than 140 percent increase in SLA loans and an over 200 percent increase in the number of lenders using the program. And, in FY 2013 alone, SBA has already surpassed total SLA loans and approved SLA dollars for FY 2012 and 2011 combined, with more than 1,700 loans approved for a total of more than $258 million since the start of the fiscal year.

But even as more small business owners take advantage of loans offered through these programs, analysis still suggests that the largest credit gap remaining is for smaller dollar loans, which have a strong correlation to the financing needed by start-ups and entrepreneurs in underserved communities.

To help address this credit gap, President Obama’s budget for 2014 proposes waiving fees on loans less than $150,000–a measure built on the proven successes we’ve seen in the past. Eliminating these fees will encourage lending to those small businesses that face the most constraints on credit access, and will create more important lending opportunities for underserved communities.

Microloans and smaller dollar loans are a key resource that helps put more minority entrepreneurs and business owners in a position to succeed and create jobs that will in turn help drive our nation’s economy. Empowering these businesses, and embracing an inclusive view of entrepreneurship, is essential to America’s long-term economic growth and innovation.


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