It’s hard to believe it’s only been a year since Maria Contreras-Sweet took her oath to lead the U.S. Small Business Administration (SBA).
From introducing a new business credit score model, to waiving fees on micro-loans, to launching an online marketplace, she’s been busy.
Since day one, Contreras-Sweet and her team have been rolling out major changes–designed to get more capital into the hands of smart entrepreneurs.
If you need funding, you need to get to know about theses changes. It can save serious cake. An SBA-backed loan usually carries a much lower than rate than alternative lenders (around 6% versus 30+%).
The change that jumps out most to me is that the agency now places more weight on your business credit score than your personal credit score. This model gives the SBA a more comprehensive view of your business–something we’re fighting for at Nav.
Read more about what Contreras-Sweet said about the agency’s big changes:
- Predictive credit scoring – Last summer, the SBA implemented a new underwriting standard to ensure capital reaches communities more equitably. Predictive credit scoring enables banks to make immediate approval decisions on smaller-dollar loans. We’re putting more weight on business credit than personal credit, because we understand that many entrepreneurs made personal sacrifices during the recession to keep their business afloat. A person’s race, ethnicity or gender should never impact their ability to get a small business loan; only their creditworthiness should.
- Online matchmaking – Small business lending is the next frontier for online matchmaking services. This winter, SBA launched LINC to help entrepreneurs get a date with a lender. This tool allows small business owners to go to sba.gov and fill out a short questionnaire, which is then blasted out to our lending network. Interested lenders will reply within 48 hours to arrange a meeting.
- Fee relief – We waived fees on loans of $150,000 and less, so small business owners on tight budgets aren’t priced out of the SBA lending market.
In addition to these changes, the SBA is also signing up more credit unions and community banks to offer their loans. Take a little time to research whether smaller banks or credit unions in your town are offering SBA loans. These local lenders may be more willing to help you than bigger, national banks.
At Nav, we want to help you take control of your business credit, so you can access capital on the best terms–like an SBA loan. That’s why we give you instant access to your business credit data and tools to help you build it for free. No credit card ever required.
Note: Portions this post were pulled from the Huffington Post Small Business Blog
About the Author: Jared Proctor is Content Manager of Nav, the first site giving small business owners free access to their business credit data and insights. Jared has over fifteen years of financial services experience and written extensively about small business issues.
This article was originally written on April 28, 2015 and updated on July 7, 2017.
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