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SBA Lending Hits Five-Year High in Connecticut

  • Lending through the U.S. Small Business Administration’s traditional programs hits a five-year high in the 2021 fiscal year
  • The bulk of the funds provided came through the 7(a) program, where the SBA helps guarantee loans
  • Connecticut SBA district director joins commitment to improve equitable access to the agency’s financing options

Summary by Dirk Langeveld

Hundreds of small businesses in Connecticut received financing through the U.S. Small Business Administration’s traditional programs, with loan volume hitting its highest level in five years.

The SBA Connecticut District Office approved more than $368 million through 768 loans during the 2021 fiscal year, which extended from October 2020 to September 2021. These loans came in addition to COVID-19 relief programs, which have provided billions of dollars in funding to Connecticut small businesses.

“The historic activity in SBA’s traditional loan programs is due to the cooperation of our state, regional and national lending institutions, along with the efforts of our resource partners across the state that are dedicated to maintaining equitable access to capital for Connecticut’s small businesses and entrepreneurs,” said Catherine Marx, Connecticut’s SBA district director.

The bulk of these loans came through the 7(a) program, which provides loans of up to $5 million to assist small businesses with working capital, debt refinancing, and inventory. The SBA guarantees that a portion of the loan will be repaid to the lender if the borrower defaults, allowing small business borrowers to benefit from a lower equity injection as well as a longer amortization period with an interest rate capped by the government.

A total of $294 million in 7(a) loans were approved for 632 small businesses in Connecticut during FY 2021. This volume represented a 78 percent increase over the $165 million approved in Fy 2020, making it the highest level of 7(a) loan approvals in the past five fiscal years.

Another $71 million was approved for 86 small businesses in the 504 loan program, a 79 percent year-over-year increase that also made it the highest loan volume in five years. In this program, the loan is split with a private lender providing 50 percent of funding, the SBA 40 percent, and the small business 10 percent to facilitate fixed rate loans toward costlier projects such as real estate purchases and improvements or equipment upgrades.

The SBA Connecticut District Office also approved $1 million in microloans to support 41 small businesses, with 61 percent going to underserved communities including Asian, Black, and Hispanic entrepreneurs. Microloans provide up to $50,000 for working capital, inventory, and equipment.

Marx said the office would work to ensure equitable access to the SBA programs, echoing a commitment recently made by SBA Administrator Isabella Casillas Guzman.

“In FY 2022, the SBA along with multi-level stake holders will increase efforts to expand access and promote lending programs to reach underserved communities and persons otherwise adversely affected by persistent poverty or inequality,” said Marx.

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