SBA aims to keep its loan programs affordable, agency official says

The U.S. Small Business Administration is studying how to lessen the impact of rising interest rates on borrowers in its loan programs, the agency’s top leader in New York State said on Thursday.

Marlene Cintron told Newsday that SBA’s longstanding loan programs are attractive because of their below-market interest rates. But “below market-rate lending as a result of these rate hikes [by the Federal Reserve] is now pretty high, especially when you compare it to what we’ve been doing for the last 12 years,” she said.

The Fed on Wednesday raised its benchmark interest rate by three-quarters of one percent — the largest hike since 1994 — and signaled more rate increases will follow. The central bank is attempting to combat inflation by making it more expensive for consumers and businesses to borrow.

Cintron said on Thursday that she asked SBA Administrator Isabella Casillas Guzman “if there is a way to manage these rate hikes that are added onto the prime interest rates” used by banks for borrowers with good credit to receive loans.

“Is this [mandated by law] that our loan products be prime plus X amount?...So, that’s what we’re looking at right now,” said Cintron, administrator of SBA’s Region II, which includes New York. She spoke to Newsday during a small-business conference organized by the Long Island Association business group.

The SBA lending programs affected by rising interest rates are: 7(a) bank loans of up to $3 million per applicant for operating expenses; 504 loans from Certified Development Companies of up to $5 million for the purchase of equipment and other fixed assets, and microloans of up to $50,000 in federal funds for startups.

Together, the programs brought a record $400 million to small borrowers on Long Island in 2021, Cintron told attendees at the half-day conference held at Hofstra University.

The loan programs could help small businesses and nonprofits with approved applications for COVID-19 Economic Injury Disaster Loans that were not funded.

“If they’ve been approved [for COVID EIDL], there’s a pretty good chance that they’re more than eligible for [the 7(a)] working capital loan,” she said.

The conference’s second keynote speaker was Ron Busby Sr., CEO of the U.S. Black Chambers in Washington.

He said the federal government must do more to ensure Black-owned businesses get their fair share of contracts. In 2020, 1.67% of $960 billion in federal purchasing was done with Black-owned firms, compared with 1.78% with Hispanic-owned firms and 1.81% with Asians, he said, citing a speech by then-President Donald Trump.

Separately, the LIA unveiled a “Small Business Support Program” on Wednesday.

The initiative offers a free six-month membership in the LIA for companies with 10 or fewer employees that sign up by Aug. 31. There will be new networking events, such as joint meetings of the LIA, Long Island African American Chamber of Commerce and Long Island Hispanic Chamber of Commerce, and greater access to free business-counseling groups.

“We want to help you grow your business,” said LIA CEO Matt Cohen. “We want you to know that the LIA has your back.”

By James T. Madore

james.madore@newsday.comJamesTMadore

James T. Madore writes about Long Island business news including the economy, development, and the relationship between government and business. He previously served as Albany bureau chief.