Diverse Small Businesses Increasingly Accessing SBA Programs

Diverse Small Businesses Increasingly Accessing SBA Programs

A steady rise in underserved communities underscores another year of major accomplishments in Massachusetts

BOSTON – Massachusetts is home to approximately 615,775 small businesses according to data compiled by SBA’s Office of Advocacy.  The annual Small Business Profiles for the States and Territories reported that the commonwealth’s small businesses employed about half -- or 1.4 million of the state’s private workforce in 2012. Another highlight was that nearly all firms with employees in Massachusetts are defined ‘small’ by federal standards and eligible to participate in SBA programs -- making up 97.8 percent of all employers in the state. (Source: Statistics of U.S. Businesses, U.S. Census Bureau)    

“Fiscal year 2015 was a fantastic year for small business lending in Massachusetts.  Our network of lenders and intermediaries approved 2,591 loans -- while supporting a total of over $645 million through SBA’s business lending programs,” according to an announcement today by Robert H. Nelson, SBA Massachusetts District Director.  “Our two flagship capital programs, the 7a and 504 -- saw an increase in the number of approvals by 11.35%, while also increasing the total dollar amount by 10.64% from the previous year. Additionally, the fee waiver incentive for borrowers continued helping entrepreneurs that need small dollar loans realize their dreams, while our underserved markets continued gaining awareness and access to SBA programs”.

Lending Highlights

The SBA guaranteed 2,342 loans through its flagship 7(a) Loan Guaranty Program for a total of more than $317 million supported by a network of 145 lenders. These loans are available for most legitimate business purposes, including: purchase or construct real estate, equipment and inventory, to finance fixtures and leasehold improvements, debt refinancing, and for working capital. Massachusetts ranked #3 out of 68 SBA offices nationwide in this category, an increase in dollar amount of 10.89% from FY14. 

·         Eastern Bank was the #1 SBA 7(a) lender in Massachusetts for the sixth year in a row with 815 loans totaling more than $46 million and the #1 504 lender with 43 loans totaling over $31 million. Eastern is also the #1 SBA lender in New England.

·         Citizens Bank was the second highest producer of 7(a) loans with 124 approvals totaling just over $17 million; Berkshire Bank was third with 119 loans totaling over $6.6 million. Completing the list of top ten SBA lenders in Massachusetts are Rockland Trust Company, Santander Bank, TD Bank, Leader Bank, Independence Bank, Cambridge Savings Bank, and South Shore Bank.

The Certified Development Company/504 Loan Program had 249 loans supporting more than $325 million. SBA 504 loans are used to construct, purchase or rehabilitate real estate and can also finance machinery and equipment. Massachusetts ranked #5 out of 68 SBA Offices nationwide in this category.

·         Bay Colony Development Corp. was SBA’s leading Certified Development Company/504 lending partner in Massachusetts with 80 loans totaling over $40 million, while Granite State Economic Development Corp. came in second in terms of volume with 77 projects – but led in dollar amount totaling over $44 million. New England Certified Development was third with 52 projects totaling over $37 million.

The SBA Microloan Program, through nine microloan intermediaries approved 76 loans totaling over $1.3 million. These loans provide up to $50,000 to help small businesses and certain not-for-profit childcare centers start up and expand; an average microloan is about $13,000.  Accion USA located in Cambridge is the #1 microlender in Massachusetts for both volume of loans and dollar amount, with 27 loans totaling over $364 thousand.

Nationally, the U.S. Small Business Administration 7(a) Loan Program achieved significant milestones in FY15 with 63,460 7(a) approvals totaling $23.58 billion -- representing an increase of 21.94% by number of loans approved and 22.89% in dollar amount approved over fiscal year 2014.  The CDC/504 Loan Program approved 5,787 loans totaling $4.29 billion. Overall, loan numbers increased 19.5% in total number of approvals and 19.2% in total dollars.

Fee Waiver Impact & Small-Dollar Lending

During this fiscal year, SBA zeroed out fees on loans of $150,000 or less and saw a significant spike in small-dollar lending activity in the state. The fee waiver will continue in fiscal year 2016 as well. 

“This year, the SBA fee waiver initiative was renewed and impacted entrepreneurial growth by helping Massachusetts business owners save over $1.2 million in fees.  This program helped incentivize borrowers and contributed to the fact that SBA Massachusetts ranked #1 on loans less than $50,000 in the entire country,” said Seth Goodall, SBA New England Regional Administrator.

Massachusetts led the nation on small dollar 7(a) loans, ranking #1 on loans less than $50,000 with a total of 1,345 approvals; and ranked #2 on loans less than $150,000 and underserved communities with a total 867 approvals. 

Underserved Communities

The major achievements highlighting this year’s success, show steady increases in underserved community lending -- with every minority group achieving strong increases.  ‘Underserved’ can include populations from inner cities, rural areas and segments such as women, minorities, veterans, and American Indians/Native Americans.  

Loan approval data from our 7(a) Loan Guarantee Program from FY09 to FY15 highlights the following in Massachusetts:

·         American Indian category had the biggest increase in growth of any underserved group tracked from FY09 to FY15, increasing 250% -- from 4 approvals in FY09 to 14 approvals in FY15.

·         Asian American & Pacific Islander category had its best year in FY15 with 177 approvals, while increasing 172.3% from FY09-FY15; 65 approvals in FY09 to 177 approvals in FY15 -- the largest gain in number of approvals of any minority group from the same period.

·         Black/African American category had its best year in FY15 with 65 approvals.

·         Hispanic category had its best year in FY15 with 124 approvals, while increasing 169.6% from FY09-FY15; 46 approvals in FY09 to 124 approvals in FY15.

Additional Highlights

·         SBIC (Small Business Investment Company) Program funds in Massachusetts made 144 financings to 71 businesses for $286.4 million.  Massachusetts ranked #5 out of 68 offices nationwide for the number of businesses financed.

·         SBIR (Small Business Investment Research) Program granted 85 (phase 1 & 2) awards totaling over $26.8 million. Massachusetts is #2 out of 68 offices nationwide for number of awards.  

·         Surety Bonding Program issued 80 bonds totaling $47.4 million. 

·         Federal Contracting Awards to MA Small Businesses (estimated):

o    Small Business: $2.3 billion

o    Hub Zone: $67 million

o    8(a): $123 million

o    Veterans: $173 million

o    Service Disabled Vet: $149 million

o    Women $167 million

About SBA Massachusetts District Office: 
SBA’s District Offices are responsible for the delivery of SBA's many programs and services throughout the country. Services available include: FREE counseling, advice and information on starting a business through our resource partners: SCORE, Center for Women & Enterprise and Massachusetts Small Business Development Centers; Financial Assistance for new or existing businesses through guaranteed loans made by area bank and non-bank lenders; Assistance for businesses owned and operated by socially and economically disadvantaged individuals qualified for federal procurement opportunities.

For more information about SBA Massachusetts lending figures in fiscal year 2015, the following resources are available:

·         FY 2015 Annual Report

·         FY 2015 Loan Volume Report

·         SBA Massachusetts Lender Network List (as of: April 2015)

SBA Massachusetts will hold an Annual Meeting honoring lenders at a special awards ceremony at Constant Contact Headquarters in Waltham on Tuesday, November 10, 2015.  For more information, please visit: www.sba.gov/ma