President Obama will go to the U.S. Capitol and speak to the nation tonight during his sixth State of the Union address to Congress, and among the topics he is expected to cover are immigration and the economic resurgence, including post-recession small-business growth.
Over the past three decades it has become a tradition that the First Lady invites honored guests who have done something deserving of recognition to join her in her box to listen to the speech. Tonight Carolyn Annette Reed will be there.
Reed wrote to President Obama about how she was able to expand her small business and open an additional Silver Mine Subs shop in Denver through an SBA loan. She also informed the president that she supported the Affordable Care Act that created "Obamacare."
"It was a relief to be able to secure the SBA loan to open our other stores," wrote Reed, a former UPS driver who had no business experience and who--with the help of SBA funding--now owns multiple shops across Colorado and employs dozens of people in the state.
The spigot has opened up significantly since the last State of the Union address. According to the most recent Biz2Credit Small Business Lending Index, my company's monthly analysis of loan rejections and approvals, big banks ($10 billion-plus in assets) approved 21.1 percent of small-business loan requests in December, and a year-to-year comparison shows that approval rates at big banks were up nearly 20 percent in 2014.
Banks tend to fund bigger deals. Thus, smaller enterprises may well find reasonable financing through marketplace lending (formerly called peer-to-peer lending) that is increasingly being funded via institutional lenders such as family funds and insurance companies. Marketplace lending has increased each month since Biz2Credit began monitoring the category in January 2014. These lenders granted 60.1 percent of funding requests by small business owners in December, an increase from 59.9 percent in November.
Positivity is in the air among entrepreneurs. According to a survey of U.S.-based small companies released this week by the Endurance International Group, 66 percent of small-business owners have a positive economic outlook for 2015 compared with 2014. Additionally, the National Federation of Independent Business's Small Business Optimism Index for December found that entrepreneurs are the most optimistic they've been in eight years--since before the start of the Great Recession.
This good news should not lead us to think we are in a small-business utopia, however. A report from four regional Federal Reserve Banks last week found that 52 percent of businesses with revenue less than $250,000 a year were rejected for funding during the first half of 2014. Further, bigger "small businesses" are getting loans, as eight out of 10 companies with more than $10 million in annual revenue secured financing.
Given all of this information, it will be interesting to see how rosy a picture Mr. Obama will paint tonight. While the credit markets have indeed gotten better for small businesses during his second term, there is always room for still more improvement.
The State of the Union address is a time-honored tradition that allows the president to update Congress on his plans for the upcoming year, and speaks to the American people about his administration's priorities and policies. Mr. Obama is likely to tie in his immigration policies and the benefits that foreign-born residents bring to the U.S. economy as well. Watch for the response from the Republican-controlled Congress on this topic.
You can view or listen to it online at www.WhiteHouse.gov/SOTU (the site will stream the address and offer exclusive interactive graphics and charts) or watch it on TV tonight at 9:00 p.m. ET.