Dec

28

SBA: Think Credit Cards Instead of Big Loans

December 28, 2006 | Anita Campbell

Some people continue to criticize the U.S. Small Business Administration for making loans they say are too small and putting caps on Section 7a loans.  They want to increase the maximum loan size from $2 Million to $3 Million. 

But guess what?  That’s what small businesses want:  small loans.

According to a study by the SBA’s Office of Advocacy, the number of micro business loans (i.e., small business loans <$100,000) increased 25 percent between June 2004 and June 2005.   Many of those loan amounts were in the form of credit cards, reflecting what we all know without needing a study to tell us:  small businesses finance their businesses with credit cards.  Period.

Check out the just-released report:  Small Business and Micro Business Lending in the United States, for Data Years 2004-2005 (PDF).  In addition to statistics on loan trends, the report also lists the top small-business lenders by state.

Maybe Congress needs to think about creating an SBA guaranteed credit card program, instead of increasing the limits of SBA loans.  Just think of the number of small businesses that could be financed through credit cards for the equivalent of one $3 Million loan. 


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