SBA Loans Reach New Record in Michigan

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The dollar value of SBA loans lent in Michigan has reached a new record high. 2,075 business loans worth $944 million were lent in the 2012 fiscal year. While the number of business loans in Michigan has decreased since 2011, the total value of loans lent has not.

SBA commercial loans are business financing guaranteed by the Small Business Administration. The SBA insures the money that lenders give to borrowers, minimizing the risk that lending institutions—such as banks and credit unions—face in financing. This allows lenders to give financing with lower interest rates.

In the 2012 fiscal year, the Michigan District Office guaranteed 1,742 SBA loans in its 7(a) guarantee program for a total value of $547 million. This was a 16 percent decrease from 2011, largely due to the termination of the American Recovery Act. That act aided small businesses by providing contracts, grants, and entitlement programs.

“Lenders throughout the state have found that SBA business loan programs are an important asset in helping small business clients,” said SBA Michigan District Director Gerald Moore, in an interview with CBS Detroit.

The SBA 504 loan program accounts for a sizable portion of Michigan’s record since it led to the lending of 333 commercial loans that totaled $176 million. The SBA loans in the 504 loan program leveraged an additional $221 million in financing for a grand total of $397 million.

“This program helped small businesses position themselves for expansion and job creation,” said Moore.

Compared to 2011, the dollar value of all SBA financing rose 62 percent. The 504 loan program increased due to a temporary program that allowed the refinancing of existing commercial debt. Unfortunately for entrepreneurs and small business owners, this refinancing program ended in September of 2012.

SBA loans were lent in 74 of Michigan’s 83 countries by over 135 lenders. This signifies that despite being a state hard-hit by the recession and a member of the “Rust Belt,” Michigan still has a desire and drive to participate in the SBA business loan program.