SBA 7(a) Small Dollar Lending Increases 33%

SBA 7(a) Small Dollar Lending Increases 33%

From SBA’s 2024 Capital Report . . . 

The most dramatic trend in SBA capital programs was the accelerating growth in smallest 7(a) loans backed by SBA. In FY 2024, SBA backed over 38,000 7(a) loans under $150,000, for a total of $2.7 billion. Those totals reflect a doubling of these smallest-sized loans since 2020 and a one-third increase over FY 2023 alone. 

The 7(a) loan size category of $150,000-$500,000 also saw outsize growth, rising to 18,100 in FY2024, a 16% increase over 2023. 

The growth in 7(a) loans under $150,000 is significant because of the steady downward trend in under-$150,000 loans that preceded the growth. Fiscal Year 2021 marked the fifth consecutive year in which the smallest 7(a) loans declined from the prior year. 

Lack of access to small loans had increasingly put small businesses under stress, forcing them to turn to credit cards or high-interest online or brick and-mortar express lending options marked by high interest rates and low repayment. The trend reversal was supported by several key policy changes implemented by SBA that targeted and incentivized small dollar lending, the most significant of which became effective in August 2023.

Access the Report Here

This article is condensed from the October 28, 2024 Coleman Report