TribLIVE

| Business


 
Larger text Larger text Smaller text Smaller text | Order Photo Reprints

SBA wants to cut fee on its smaller dollar loans

On the Grid

From the shale fields to the cooling towers, Trib Total Media covers the energy industry in Western Pennsylvania and beyond. For the latest news and views on gas, coal, electricity and more, check out On the Grid today.

Friday, June 21, 2013, 12:01 a.m.
 

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 joravecz@tribweb.com.

 

 
 


Show commenting policy

Most-Read Business Headlines

  1. Russian steel to lose duty shelter
  2. Rural communities can’t shake effects of subprime crisis
  3. Calgon Carbon poised for explosive growth
  4. CMU spinoff’s CEO gets council honors
  5. Market sell-off offers opening
  6. Chevron puts $20M into educating, training Appalachian workers
  7. Natrona Bottling Co. keeps soda pop operation focused on craft, taste
  8. Amid struggles, top fiscal executive to leave EDMC
  9. Stocks rally; S&P 500 has best day of 2014
  10. High pollution levels found near Ohio gas wells
  11. PPG Industries to buy Westmoreland Supply paint store chain
Subscribe today! Click here for our subscription offers.