Why The 2018 Budget Proposal Shouldn’t Worry SBA Loan Applicants
The 2018 budget under our new administration has raised concerns for many people, including small business owners. Over the past few months, a lot of numbers have been thrown around, calling into question the longevity of important programs like the Small Business Administration (SBA). Now that things have settled down a bit, let us ease your mind by addressing some misconceptions about the status of the SBA and how the changes might affect you.
Will the SBA be affected by the budget cuts?
Like all the other federal agencies, the Small Business Administration (SBA) is expecting some changes next year when this administration’s first budget takes effect. The SBA will see comparatively little upheaval, however, and its loan programs will remain largely as they are.
At the National Association of Development Companies conference this past May, new SBA Administrator, Linda McMahon, noted that the SBA is not planning on adding any additional loan programs at this time. Instead, the focus will be on ensuring the existing ones more efficient and customer friendly.
By how much will the SBA be cut? Is that a lot?
The proposed 2018 budget reflects a commitment to the SBA and to small business itself. In comparison with some agencies whose budgets will be cut by up to 31%, the SBA will only see its budget reduced by 5%. The SBA 504 and 7(a) loan programs remain fully funded at $45 billion.
Which programs are going away and which are staying?
In order to save $12 million, PRIME (Program for Investment in Micro-Entrepreneurs) technical assistance grants, growth accelerators and regional innovative clusters are being eliminated. According to the administration, this shouldn’t affect the state of things too much, since the private sector already “provides efficient mechanisms” in those areas. The budget for microloans will also be trimmed from $35 million to $28 million, which leaves about 80% of their funding intact.
The good news is that the 7(a) and 504 loan programs will go on largely as before, with little disruption and no impact on those seeking loans for their small businesses.
How does this reflect the administration’s view of small business?
Trump indicated his support for small business throughout his campaign. “The president is committed to assisting small businesses succeed through reducing the regulatory tax burdens that can impede the development of small firms,” an administration spokesperson said.
“My hope is that, as more people learn about the services the SBA provides, we can continue to revitalize the spirit of entrepreneurship in our country and more people will have the confidence, skills and resources they need to succeed as small business owners,” newly appointed SBA Administrator, Linda McMahon, said in an upbeat video presentation that appeared on the SBA’s YouTube channel to mark Small Business Week.
What is the future of the SBA after 2018?
Energy will be refocused at the SBA, as the 2018 budget cuts are targeted. So while several offices that support small business closing, the role of the SBA in small business economic life will only grow. After a little belt-tightening of its own, the SBA will remain the mainstay of stimulus measures for small business.
How does this affect my decision to apply for an SBA loan?
The short answer: It doesn’t.
The long answer: The budget doesn’t go into effect until October 1st, 2017. As yet no cuts have been implemented. Even once they are, the changes will not impact the 504 program. It’s business as usual for small businesses.
If you are considering applying for an SBA loan, Certified Development Companies (CDCs) represent a vital source of capital for fixed asset investment, as well as advocacy and guidance. For example, TMC Financing is a Premier Certified Lender with the SBA, which gives us increased authority to approve, process, close and service loans quickly. Our responsive, expert staff is ready to help every step of the way. You can speak to a TMC loan expert to find out more about the SBA 504 loan program.
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