June 15, 2021
Writer, SBA Hot Topic Tuesday
SBA Hot Topic Tuesday — SBA Administrator’s 2021 Priorities — 1) More 7(a) Borrower Friendly Changes, 2) 7(a) Volume to Increase, 3) Focus on Underserved Markets
“For our economy to recover, we have to transform our programs and services to really meet these businesses where they are at,” says SBA Administrator Isabel Guzman in an interview with Inc.
The pandemic, she adds, laid bare key fissures in the SBA’s lending programs. As a result, the agency is preparing to make many changes to ensure the SBA’s programs continue to be effective for all small businesses.
Here are three key changes that can be expected from Administrator Guzman in 2021 and 2022:
- The SBA will continue to provide breaks in loan terms. The Economic Aid Act increases the SBA guaranty percentages to 90% for Standard 7(a) loans and 7(a) Small loans. It also waives borrower guarantee fees and service fees through September 30, 2021. Nevertheless, Guzman has hinted that additional breaks may be implemented after the September 30, 2021 deadline.
- The number of approved SBA lenders will continue to increase. Before the pandemic, there was around 1,800 institutions that were considered active lenders (institutions that made an SBA loan in the previous two years). The Paycheck Protection Program (PPP) increased the number of active lenders by 5,000. While fintech companies that supported borrowers without traditional lending relationships were able to help during the crisis-era, they still lack the ability to help with typical loans. Guzman is looking to change that in order to continue the impact that was made during PPP.
- The SBA is shifting its focus to better include small businesses. The goal of the new Community Navigators program is to give funding to community financial institutions and organizations so they can help eligible small businesses become aware of and participate in relief programs.
“We’ll continue to evaluate [our programs’] impact, and [assess] which ones are best for the small businesses, to meet them where they’re at.”