As published in Scotsman Guide's Commercial Edition, March 2009.
This past year was a tough one for the commercial mortgage industry. Numbers were down across the board as lending slowed.
The slowdown included U.S. Small Business Administration (SBA) loans, as well. In fiscal year 2008, SBA-approved loans fell 29 percent from fiscal 2007, according to the SBA. Plus, their combined loan value dropped by about 13 percent in the same period.
For commercial mortgage brokers who work with SBA loans, it helps to know the potential reasons for the recent decline. With this understanding, brokers can better determine whether SBA loan programs will suit their small-business clients' needs.
Many industry players were surprised by the SBA-loan-volume decrease. After all, the government set up the program in 1953 in part to help small businesses by providing the kind of high-leverage loans that most traditional banks wouldn't offer.
There were some supply-and-demand issues, however, that caused banks to curb even their SBA-lending activities. These are the issues brokers must understand to help their small-business clients determine whether SBA loans are right for them.
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