The U.S. Small Business Administration approved nearly $19.2 billion in loans during fiscal year 2014, a 7.4% increase in the dollar amount over fiscal year 2013 that was driven by a 12% spike in the number of loans.
The SBA approved 52,044 applications to its 7(a) Loan Program, which is designed to give small businesses the most comprehensive type of financial assistance for expenses such as short- and long-term working capital, exports and the refinancing of existing debt.
Nationwide, small businesses generate “two out of every three net new private sector jobs,” SBA Administrator Maria Contreras-Sweet said in a November 2014 news release.
“These small businesses are the cornerstone of our communities, so their success and expansion is vital to the nation’s economic growth,” Contreras-Sweet said.
SBA lending to minority-owned businesses also jumped in FY 2014, with loans to African-Americans increasing approximately 36% year-over-year, and loans to women and Hispanics each up 14%.
The $19.19 billion loan total exceeded the $17.5 billion authorized for the FY 2014 lending program and required extra funding from Congress, which was approved weeks before the end of the fiscal year.
SBA loan eligibility is generally based on what a business does to earn income, where it conducts its operations and the character of its owners. Loan applicants are expected to have tapped into their personal assets and other financial resources before requesting SBA funds. The loan must be used for a “sound business purpose” and applicants must operate for-profit entities.
Among the categories of businesses that are ineligible for the SBA’s 7(a) Loan Program:
Wells Fargo & Company was the SBA’s top lender in fiscal 2014, approving $1.6 billion of the nationwide loan total, the company announced in a November statement. The San Francisco-based lender said it has increased its SBA 7(a) lending by 96% in total dollars since fiscal 2009.
“SBA loans provide options for creditworthy entrepreneurs and small business owners who may not be able to obtain a conventional loan that meets their business needs.” Donna Serres, head of Wells Fargo’s SBA Lending Division, said in a statement.
A look at just one city offers a glimpse of how SBA loans can ripple through a community.
The SBA’s office in San Antonio, Texas, distributed about 835 loans totaling $403 million in 2014, a jump of almost 6% over the previous fiscal year’s total dollar amount, the San Antonio Business Journal reported.