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Expect More SBA Loans in 2011

This month I'm turning my column over to Heather Endresen, senior vice president, manager of SBA and Government Lending for Union Bank. She'll discuss small business trends for 2011 in light of the Small Business Jobs Act of 2010.

By Heather Endresen

Small-business trends will be influenced this year by passage of the Small Business Jobs Act of 2010 (H.R. 5297).

According to the SBA, the new law provides approximately $30 billion to small banks (those with less than $10 billion in assets) for lending to small businesses, offers approximately $12 billion in tax breaks to small businesses and expands the loan limitations of the SBA.

For women-owned businesses, there may be even more loan opportunities. Banks may be able to offer credit to small businesses that might not have qualified previously. (According to the SBA, in the first week of the Small Business Jobs Act, the agency provided nearly 2,000 loans totaling nearly $1 billion.) State funding programs and community banks also will receive more federal dollars to lend to small businesses. And the law provides $50 million in grants to Small Business Development Centers to fund counseling and training.

The following is a more detailed look at the trends this new law may inspire in 2011:

  1. Increased business lending. Two things will influence this trend: 1) businesses will start asking for credit again and 2) SBA dollar volume is expected to increase. At the annual conference of SBA lenders in Anaheim last fall, executives predicted that the volume of loans will double in 2011. More businesses will be willing to make investments and borrow money, and banks are more willing to lend when they can make use of SBA risk enhancements such as guaranteed loans.  
  2. Enhanced renewable energy lending programs. In 2011, expect more small businesses to make improvements such as adding energy-saving solar panels to their businesses. Some banks will offer specialized programs to incorporate solar-panel improvements into SBA loans. This applies not just to large businesses but smaller ones as well. They'll be able to save energy by using solar to heat and power their businesses.  
  3. Revised refinancing. Now may be the time for small businesses to refinance real estate loans. The new law allows SBA 504 loans to be used for refinancing real estate loans on owner-occupied commercial property. The SBA also has increased the maximum 504 loan amount to $5 million ($5.5 million for manufacturers and energy loans), and waived fees for banks and borrowers.  
  4. Increased exporting. The new law offers various incentives for small businesses to export goods, including turning a pilot loan program into a permanent program with 90 percent guarantees for loans up to $350,000. Loans between $350,000 and $500,000 receive 75 percent guarantees.  
  5. Increased certification for government contracts. The new law strengthens small businesses' ability to compete for federal contracts. Women-owned businesses that are certified can compete for federal and state government contracts. Government agencies award millions of dollars in contracts to small businesses every year. See the SBA website for details.

Heather Endresen is senior vice president, manager of SBA and government lending for Union Bank. For more information, visitunionbank.com.