National Small Business Month Q&A with Jonathan Smith
SBA Lending: A Q&A with Jonathan Smith
Small Business Administration (SBA) loans can be an ideal solution for entrepreneurs looking to finance their existing or future small business ventures. Jonathan Smith, executive vice president and head of SBA (Small Business Administration) Lending, talks about the current need for SBA loans, trends for specific business types and how this year’s small business loan market compares to 2023.
Among small business owners seeking loans, are there two or three areas that rise to the top of what people are looking to purchase/invest in this year, i.e., new technology or real estate?
Business acquisition financing and franchise financing continue to be leading categories for SBA loan requests. Those who desire business ownership gravitate toward these categories since they present as a good starting point for aspiring business owners.
Acquiring an existing business provides an immediate customer base, established revenue streams and a proven operational framework, reducing the risks and time associated with building a business from scratch. It also allows new owners to leverage existing relationships with suppliers and access a trained workforce.
Franchise ownership, on the other hand, combines the entrepreneurial spirit with the support of a larger network. Franchisees benefit from a recognized brand, tested business models, comprehensive training programs and ongoing support in marketing and operations. This blend of independence and support minimizes the learning curve and increases the likelihood of success in the competitive business landscape.
Among new small businesses being formed, are we seeing an uptick in any categories, i.e., auto repair, gyms/fitness centers, dog grooming or specialty food/beverage stores?
On the franchise side, some of the top categories that are rising are those involving pets, fitness, and quick-service restaurants. With the help of the SBA there has been greater opportunity for all individuals, especially women, minority-owned business enterprises (MBEs) and veterans, to achieve their goal of business ownership. This aid provided to people of diverse backgrounds and interests has promoted the increase in these different categories.
How does the number of people inquiring about and/or receiving small business loans so far in 2024 compared to a year ago? Anything interesting in that regard — maybe fewer business owners seeking larger loans or business owners seeking smaller loans?
In comparison to 2023, the SBA dollar volume nationwide for the 7a program is trending about the same. This being the primary loan program for small businesses offering flexible and accessible financing options to help them start, grow and succeed in their ventures.
The SBA 504 program, which is used for real estate and equipment, is currently trending well below 2023 but the recent SBA does expect an uptick in the second half of the year (SBA fiscal year-end is 9/30/2024).
To connect with one of Northwest’s preferred SBA lenders or for more information on the bank’s SBA lending capabilities, visit: https://www.northwest.bank/small-business/borrow/small-business-loans/.
