SBA Loans Maintain Record Highs

July 18, 2005--The Small Business Administration predicts that approvals for its 7(a) and 504 loans will continue to set record high levels, based on this year's approval rates now in the third quarter of their fiscal year. The rise in loan approvals has occurred in industries across the board.

So far in this fiscal year, the SBA has approved more than 77,500 7(a) and 504 loan applications, guarantying $14.54 billion to both start-ups and small businesses looking to expand or rehabilitate their resources. Compared to the amount guaranteed at this point in the 2004 fiscal year, this is an increase in funding of over 20%.

The most general SBA loan, the 7(a) loan, is available for the broadest use, including providing for start-up development, company expansion, and physical capital rehabilitation. 504 loans are specifically available for the rehabilitation or acquisition of fixed assets, such as land, machinery, or buildings. With fewer applicants than the 7(a), 504 loans are only partially SBA-guaranteed, but ensure a fixed interest rate.

John Soper, Kahl Chair in Entrepreneurship at John Carroll University, is hesitant to credit a booming economy with the increase in loan approvals. "There have certainly been better times to develop," he said. "The main issue is ideas, and if those ideas are worked out well enough so that there's a possibility to make money."

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