By Emily Maltby
Wells Fargo & Co. announced this week that it extended $1 billion in loans backed by the Small Business Administration over the past 11 months. Those loans reached some 2,600 businesses, the bank reported.
- Getty Images
The bank is the first to reach this milestone in the government’s fiscal year, which ends at the end of this month, according to the SBA. The other top nine lenders collectively have issued some $3.5 billion.
Wells Fargo has always been a heavy-hitting SBA lender, but its status this year is particularly noteworthy because it indicates a larger trend: SBA lending is up overall, hitting pre-recession levels, and is on track to have a record-breaking year. With just weeks to go, the agency projects total SBA lending for its flagship 7(a) program to hit $17.5 billion.
The SBA’s program works through banks, which approve the loans. The SBA guarantees a portion of the loans against default, making them less risky than conventional bank loans. Overall, SBA-backed loans make up only a small portion of overall small-business loans—roughly 7% to 8%, according to some estimations, and as little as 1% by others.
All of the top SBA lenders have higher SBA loan figures this year compared with last, the agency says. And some 1,200 community banks that started turning to the SBA loan program during the recession are still using it today.
SBA lending is up this year because the loan program “provides extra support to the lenders,” says Steve Smits, associate administrator for the SBA’s Office of Capital Access. “We all know economic factors impacted small businesses’ resources and their balance sheets were beat up. So it’s challenging for a lender to find ways to get to a ‘yes’ answer on a loan.”
