We live in tumultuous times, where consensus is rare and many people have adopted a winner-take-all mentality. Common ground doesn't seem to exist.
That's especially true when it comes to politics and the government. Bipartisan cooperation seems to be an endangered species.
Amid the chaos, there's one government agency that remains beloved by all -- the Small Business Administration (SBA). Whenever I confer with my industry peers, nary an ill word is spoken about the SBA.
Have you heard anyone complain about SBA administrator Linda McMahon? Considering her professional wrestling background as former CEO of the WWE, she was an obvious target, but her confirmation received bipartisan support.
And consider this: Not too long ago, legislation was introduced in Congress to increase the annual limit on SBA loan guarantees for its flagship 7(a) program by 15 percent. The bill enjoyed overwhelming support, passed both the House and Senate without dispute and promptly was signed into law by President Trump.
Too often, clients come to me feeling trapped -- that there's no way out of their financial straits. Part of my job is to be an emotional counselor. Letting clients know about the SBA often serves as a soothing balm.
Or, in McMahon's own words from a recent Philadelphia Inquirer article: "Everybody wants small businesses to succeed."
So, how does the SBA avoid the turmoil--and why should you care?
The SBA is doing exactly what it's supposed to do.
The SBA is the rare agency that fulfills the mission it was created to do: helping small- and mid-sized businesses line up the funding they need to grow and prosper.
In short, SBA-backed lenders offer loans of up to $5.5 million at reasonable interest rates; counseling and educating; and with generous repayment terms that can be used in a variety of ways. Examples include buying a business or building; refinancing existing debt; or obtaining inventory or equipment.
Do note that the SBA doesn't make the loans itself. Instead, the SBA provides government backing for loans made by partner banks, credit unions and other financial institutions. Those guarantees reduce lender risk, as smaller businesses with limited track records aren't normally lender targets and might not otherwise qualify for a loan.
SBA loan interest rates vary, as of now, from 7.25 percent to 9.75 percent -- a far cry from the 20 percent or above alternative lenders, including many so-called "internet lenders," will charge companies that can't secure traditional financing.
Beth Goldberg, SBA's New York District Director, told Forbes in June that the 7(a) program has grown by 78 percent since 2007, jumping from about $18 billion in loans in 2013 to more than $25 billion in 2017. And while the 7(a) program is the most popular offering, there are lesser-known options, too. For example, SBA CDC/504 loans are available for small business owners that want to buy equipment or buy or renovate commercial real estate. There also are microloan and disaster loan programs.
Considering all the wildfires out west, damaged businesses should consider getting an SBA-backed disaster loan.
There is one drawback.
Unfortunately, SBA programs aren't used often enough. I know from personal experience that many of my clients are either unaware of the programs (or at least the breadth of them) or don't pay attention to them in the first place.
Much of that stems from business owners falsely believing they don't qualify. You never know if you don't try. Even if you've been rejected in the past, your circumstances may be different now. And you don't need to be a miniscule business to qualify for SBA loans.
There's also a surprisingly large number of business owners out there that are unfamiliar with the SBA, which is a shame. As an entrepreneur, it's up to you to know all the financial options available when funding needs rear their head.
When those needs arise, the SBA should be the first place you look.