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SBA loan volume falls for 2008

POSTED: November 25, 2008 5:00 a.m.

WASHINGTON — A “perfect storm” of tightened credit by commercial lenders, declining creditworthiness and reduced demand for loans from small business borrowers uncertain about the future has led to a substantial decline in the number of small business loans guaranteed by the U.S. Small Business Administration during FY08, SBA Acting Administrator Sandy K. Baruah said Friday.

Although SBA posted a record year in 2007 with nearly 100,000 loans approved, that number dropped by nearly 30 percent in 2008.  The dollar value of those loans declined by 13 percent, from a combined $20.6 billion in 2007, to $17.96 billion in 2008.  Average loan size increased from $142,000 in FY07 to $183,000 in FY08, demonstrating that by increasing the average amount, these loans may in fact contribute to expanding more sustainable and successful small businesses.

Georgia experienced the same downward trend in loans. The total number of SBA guaranteed loans dropped by nearly 29 percent in FY08 while the dollar amount for these loans decline by nearly 15 percent. During the past fiscal year 2,218 SBA loans were approved in Georgia for approximately $671 million. In FY07, the agency approved 3,111 small business loans for approximately $789 million.

These program declines began not long after the fiscal year started in October 2007, and accelerated throughout the fiscal year.

The volume numbers represent loans made under SBA’s two primary loan programs, the 7(a) guaranteed loan program and the Certified Development Company, or 504, loan program. Loans approved under 7(a) declined by 30 percent, from 99,606 in 2007 to 69,434 in 2008, with loan dollars falling 11 percent, from $14.3 billion in 2007 to $12.7 billion in 2008.

In the 504 program, loan approvals fell by 17 percent, from 10,669 in 2007 to 8,883 in 2008, and loan dollars declined by 16 percent, from $6.3 billion in 2007 to $5.3 billion 2008.
 
For more information on how to get an SBA loan, visit www.sba.gov

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