The Small Business Administration (SBA) approved a record 52,044 7(a) loans in the 2014 fiscal year, totaling $19.2 billion, according to its own figures. The 7(a) is the SBA's most common loan program, designed to help small businesses get off the ground or expand. More importantly for entrepreneurs, Mark Quinn, director of the SBA's San Francisco office, told NerdWallet.com that the agency expects the number of approvals to be even higher in 2015.
The SBA is not itself a loan agency. Instead, it backs loans issued by banks or credit unions, providing guarantees to facilitate their approval. The 7(a) program covers everything from acquisitions and other operational costs to physical expenditure like construction, equipment and real estate. The agency also issues microloans up to $50,000 in value and provides aid in the case of damage from fire or natural disasters.
In the first quarter of fiscal year 2015, which corresponds with Q4 of the 2014 calendar year, the SBA already backed 15,223 loans worth $6.1 billion, up from 11,954 loans totaling $5 billion during the same period the previous year.
Quinn said the improved economy has facilitated the issuing of loans even as credit scores have been slow to recover from the recession years, thanks to stronger borrower collateral and an overall increase in confidence. The largest small business lender in 2014, Wells Fargo, similarly reported a 31 percent increase in SBA-backed 7(a) loans over the course of the year.
"As small business owners start seeing more opportunities to grow, we think they will pursue financing to expand and invest in their businesses," said Wells Fargo vice president Chris Ledesma in a statement.
Loan management software automates accounting, collection and reporting tasks, helping lenders stay on top of all their active loans and significantly reducing the risk of default.