In a recent article, Rohit Arora, a Forbes Senior Contributor and CEO of small business financing platform Biz2Credit, discusses the Biden administration's efforts to boost small business lending and offers suggestions for the incoming Trump administration to further improve access to capital for small businesses. The piece highlights recent initiatives by the Biden-Harris administration while proposing additional steps that could be taken to enhance support for entrepreneurs.
The piece was likely written before Trump announced the nomination of former Georgia Senator Kelly Loeffler as the new administrator of the Small Business Administration on Dec 4th.
Let's see what Mr. Arora says.
According to the article, the Biden administration has made significant strides in expanding access to capital for small businesses, particularly among diverse communities. In the past year, the Small Business Administration (SBA) backed a record $56 billion in capital for small businesses. This effort has led to a doubling of business ownership among Black families and new highs for Hispanic, Asian American, and women business owners over the past four years.
Key points from the Biden administration's recent announcements include:
1. Increasing the maximum loan amount backed by SBA Community Advantage Small Business Lending Companies from $350,000 to $500,000 for active lenders in good standing.
2. Releasing procurement guidance to improve federal contracting opportunities for small businesses competing for over $700 billion in federal contracts.
While these initiatives are positive steps, Arora suggests that the incoming Trump administration could implement additional measures to further support small businesses:
1. Create a small-dollar lending program through the SBA for online lenders, focusing on loans of $100,000 or less. This would better serve small businesses that don't require larger loans and could improve access for women- and minority-owned businesses.
2. Mandate technological upgrades to the SBA lending process, digitizing the infrastructure to reduce the loan application process from 90 days to less than a week. This would expedite capital access for entrepreneurs.
These proposals aim to address the urgent needs of the small business sector, which plays a critical role in the U.S. economy. Small businesses account for approximately 70% of all new jobs created since 2019 and employ roughly half of the nation's private-sector workers. However, the sector remains fragile and requires continued support and innovation in lending practices.
By implementing these changes early in his administration, Mr. Arora thinks President Trump could potentially accelerate growth in the small business community and position it as a cornerstone of his economic agenda. The focus on streamlining processes and creating more accessible lending options could have a significant impact on the overall small business lending market, potentially leading to increased entrepreneurship and job creation across diverse communities.
As the small business landscape continues to evolve, policymakers must adapt and innovate in their approach to supporting entrepreneurs. The suggestions put forth by Mr. Arora represent a forward-thinking strategy that could complement existing initiatives and further strengthen the foundation of America's small business sector.
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