Although the U.S. Small Business Administration (SBA) was closed for most of January because of the government shutdown, the percentage of SBA loan approvals dropped by just 1 percent in January at regional and community banks, which process a sizable percentage of the government-backed loans, according to the Biz2Credit Small Business Lending Index.
Business loan approval rates dropped 0.3 percent at regional and community banks in December 2018. Small bank approvals dropped a full percent from 49.9 percent in December 2018 to 48.9 percent in January.
Small business loan approval rates for big banks remained at a record-high 27 percent in January 2019, to the Biz2Credit Small Business Lending Index, which examines more than 1,000 small business credit applications made via its online lending platform, said.
“The government shutdown ultimately did not have a major impact on small business lending,” Biz2Credit CEO Rohit Arora said in the report. “There are still hurdles, however. Many companies are waiting for SBA loans that have not yet been processed.”
Beth Goldberg, director of SBA’s New York District, the agency’s largest of 68 offices across the country, said that SBA processed more than 1,100 7(a) loans worth half a billion dollars in its first week back after the shutdown.
“Our top priority was and continues be to working with SBA lenders to approve and process small business loans to get capital into the hands of the businesses that need it,” Goldberg said. “Through the shutdown, SBA’s Resources Partners – Small Business Development Centers, SCORE Chapters and Women’s Business Centers – continued to work with entrepreneurs, counseling them on all aspects of their businesses.”
Goldberg added that since reopening Jan. 28, her office guaranteed more than 200 SBA loans worth $59.3 million.
“Overall, the economy is still performing well on many levels,” Arora said. “This is beneficial to the small business lending market. As SBA lending stalled during the shutdown, alternative lenders took advantage of the opportunity by lending money to business owners in need of quick capital. Non-bank lenders fill the gaps many times for borrowers who cannot get money from traditional sources.
“Despite the government shutdown, January was still a solid month for small business lending,” Arora added.