The U.S. Small Business Administration supplied $6.5 billion in loans last year for New England companies, and this year is increasing the maximum size of individual borrowings from $2 million to $5 million for manufacturers, according to the agency's regional administrator.
Jeanne Hulit, who runs the SBA regional office in Hartford and is currently an acting associate administrator in the agency's Washington, D.C., headquarters, said last week during a banking conference at Foxwoods Resort Casino that the loan total supplied to New England businesses last year was a 14 percent increase from 2010. About 4,500 businesses in New England received loans last year guaranteed by the SBA, whose mission is to help smaller companies start up and expand.
"Nationwide, we supplied small businesses with $30 billion in credit," Hulit said in an interview during the BankWorld conference last week. "We supported 60,000 businesses nationwide."
The head of the SBA, Karen Mills, just last week was elevated to a Cabinet-level position by President Barack Obama. The move was seen as a shrewd political gesture toward the business community as the 2012 election nears as well as part of a plan that would allow the president to consolidate six federal agencies into one, saving an estimated $3 billion.
Obama already has asked Congress to give him the power to consolidate the SBA with the Commerce Department, the Office of the U.S. Trade Representative, Export-Import Bank, Overseas Private Investment Corp. and the Trade and Development Agency, according to The Washington Post.
Hulit said the SBA's record volume of loans last year is not expected to continue into 2012. She expected SBA loans to return to pre-recessionary levels of about $20 billion annually starting this year.
But loan maximums for manufacturers are being lifted substantially to try to stimulate more investments in one area of the U.S. economy that is seeing significant growth, she said. SBA loans under this program, which are set at a maximum of 2.5 percentage points above the prime lending rate, come with a federal guarantee that would repay up to 75 percent of the value of a loan if a company defaulted.
"Companies need growth capital, and banks should now feel more secure to give that," Hulit said.
Hulit said banks approved to make SBA loans make deals with businesses on a case-by-case basis, and each financial institution has its own lending standards. She suggested businesses seeking SBA loans with no banking relationship first contact a small-business development agency such as SCORE for free counseling that will include identifying banks most likely to provide financing.