The SBA (Small Business Administration) and the NCUA (National Credit Union Administration) recently announced an expanded partnership to make more small dollar SBA loans available to small business.
“A unique aspect of the SBA and NCUA partnership is that SBA small dollar loans do not count against credit unions’ business loan cap, so they are well suited to expanding access to these loans, said SBA administrator Maria Contreras-Sweet. “This provides flexibility to credit unions to distribute small dollar loans, increasing access to capital to local economies and enriching the entrepreneurial communities which credit unions serve. Since 2011, the outstanding balance of SBA loans by credit unions has seen nearly a 50 percent increase—from $810 million to $1.2 billion. This signals a growing demand for SBA loan programs. Millions of Americans have used their credit union to finance their car, home or children’s education. We want to empower credit unions to finance small business start-ups too.”
“There is a vast untapped capacity for credit unions to make more SBA loans,” said NCUA Board Chairman Debbie Matz. “This initiative will help us unlock that capacity and put it to work for credit unions, their members and their communities.”
The last few years have seen a concerted effort by the SBA to put more capital into the hands of Main Street. It started by removing fees on loans of $150,000 or less which initiated roughly a 15% increase in loans of that category over the first six months of the program. It’s no secret Contreras-Sweet is working to make the loan application process simpler and quicker; which should be another boon for small business owners.
“It’s about to become easier for credit unions to help their members finance small business ventures. It’s a natural fit; credit unions are some of this nations most trusted mission-based lenders,” said Contreras-Sweet.
The SBA is making small dollar loans a priority right now. This expanded partnership with credit unions has the potential to make more capital available to underserved small businesses on Main Street.