SBA Backs $314M in Loans to Connecticut Small Businesses
Connecticut small businesses received over $314 million in loans backed by the U.S. Small Business Administration in fiscal 2019, an 8% increase over 2018.
In total, SBA approved 776 loans to Connecticut small businesses in FY 2019, the agency said in a release.
Of the 776 loans, 661 were guaranteed, 64 were what are known as 504 loans, and 51 were microloans.
The 504 loan, or Certified Development Company program, provides financing to purchase fixed assets, including real estate, buildings, and machinery, at below market rates.
The 504 program distributes the loan among three parties: The business owner puts up a minimum 10%, a conventional loaner like a bank puts up 50%, and certified development company puts up the remaining 40%.
The microloan program provides loans up to $50,000 to help small businesses and certain not-for-profit childcare centers launch and expand. The average microloan is around $13,000.
SBA provides funds to intermediary lenders that administer the microloan program to eligible borrowers.
The lenders are nonprofit community-based organizations with experience in lending as well as management and technical assistance.
This increase in loans came in the same year that the SBA changed its rules to expand contracting and loan eligibility.
SBA said the increased lending indicates positive activity within the financial industry.
As banks continue to take on more loans, SBA said, small businesses are finding it easier to approach lenders.
SBA-backed loans reduce risk for lenders, and the administration’s resource partners offer counseling and educational programs to get entrepreneurs “bank-ready.”
“The Connecticut District Office of SBA had a strong year in fiscal year 2019 as evidenced by the increase in lending,” SBA district director Anne Hunt said.
“SBA’s processes such as Lender Match and SBA One have streamlined and simplified many of our loan programs in order to provide increased access and opportunity for both lenders and small businesses.”
Hunt praised Connecticut SBA staff and the efforts of lenders and resource partners across the state.
“Many local banks have expanded their small business lending initiatives, which is great for the Connecticut economy,” she said.
“We look forward to more banks demonstrating stronger commitments to small business lending in fiscal year 2020.”
Among the top five SBA guaranteed lenders in Connecticut this year were: Webster Bank, People’s United Bank, TD Bank, Liberty Bank, and Manufacturers & Traders Trust Co.
New England Certified Development Corporation ranked number one in SBA’s 504 loan program and Community Economic Development Fund was the top microlender.
SBA offers a variety of loan guaranty programs.
Loans are guaranteed up to $5 million and are available for most business purposes, including purchasing commercial real estate, equipment, and inventory, or for providing short-term working capital.
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