SBA wants to cut fee on its smaller dollar loans
Karen Mills, administrator of the Small Business Administration, said on Thursday that the agency is planning to address an issue advocates say is one of the most difficult for startups and companies with the fewest employees.
“We are going to eliminate all fees on all loans under $150,000,” Mills said at Pittsburgh Technical Institute in Oakdale, where the SBA celebrated National Small Business Week with a daylong event.
Mills said smaller dollar loans are where the largest credit gap exists, and they are the kind of loans startups need most.
The fee cuts are proposed as part of the Obama administration's fiscal year 2014 budget and would be in effect for at least one year if adopted.
Pittsburgh was one of five cities selected nationwide to hold events this week, with experts giving advice to small business owners in entrepreneurship, finance, exporting and health care. Several hundred attended the event here, which Mills said was her fifth visit to Pittsburgh. She also visited Seattle, Dallas and St. Louis this week and will be in Washington on Friday.
“Pittsburgh is a terrific place to do business,” Mills said, explaining why the city was selected. “It's an extraordinary American story, and we can build on the assets that are here. ... It will be a magnet for investment.”
The proposed fee cut would follow an 18-month reduction in fees on SBA loans authorized by Congress in the wake of the Great Recession, which Mills said helped bring back 1,000 lenders to SBA and increase loans by 90 percent. Loans in fiscal year 2012 hit $30.3 billion, just below $30.5 billion in 2011, both record amounts.
Still, small businesses and their advocates say that credit is hard to get, and Mills said the smallest loans “are not back,” even though the SBA has cut the paperwork required, “making it easier for the borrowers and the bank.”
Mills, the SBA's chief since 2009, has come under criticism for boosting maximum loan amounts to $5 million when it was smaller loans that many businesses need. Mills announced in February that she will step down as soon as a replacement is selected.
“Statistics say the smaller loan amounts are going unfilled, and the lenders are not there to do them,” said Marilyn Landis, owner of Basic Business Concepts Inc. of North Side, and vice chairwoman of advocacy for the National Small Business Association, a nonprofit that represents about 150,000 small businesses nationwide. “There's a lot of demand for loans under $150,000; that's a need that's not being met.”
James H. Kunkel, executive director of the St. Vincent College Small Business Development Center, said the general consensus nationally regarding the SBA under Mills has been “very positive.”
“I think rightly so,” Kunkel said. “They did lift the ceilings, increased loan guarantees for the banks, and got rid of fees for 18 months. Loan volume increased dramatically. Those policy changes certainly proved to be effective.”
Craig Street, Huntington Bank's national director of SBA lending, said a new cut in SBA fees will encourage banks. Loans under $150,000 are guaranteed 50 percent by the SBA, and the agency receives a 1 percent fee of the total loan amount. Eliminating the fee will reduce costs for the borrower and “increase lending activity,” Street said.
John D. Oravecz is a staff writer for Trib Total Media. He can be reached at 412-320-7882 or firstname.lastname@example.org.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Wolf reverses Corbett, says deal between Highmark, UPMC doesn’t limit continuity of care to very ill
- AbbVie to buy leukemia drugmaker Pharmacyclics for $21 billion
- Race toward bigger phones eases
- Big banks’ levels of capital strong, Federal Reserve finds
- Researchers: U.S. lacks proving ground for nuclear energy innovations
- IPO might test Etsy’s approach to commerce
- Americans see improved job market but a vulnerable economy, Pew poll finds
- Stocks snap losing streak as ECB reveals stimulus start date
- Worker productivity falls faster than estimated; labor costs rise
- Mud serves as multipurpose tool in $100B shale industry
- Esmark sues Slovakian businessman for $100M, alleges sabotaged deal