SBA

The Trump administration wants the Small Business Administration to shrink its workforce by 43%. At the same time, the agency is being asked to start managing the federal government's student loan portfolio.

Changes are needed to shore up the agency's finances and guarantee the integrity of its flagship 7(a) lending program, according to a leading trade group.

Small-balance commercial mortgages, SBA 504 and investor loans, all first-lien, make up the collateral pool.

The average size of a Small Business Administration 7(a) loan has fallen to just over $400,000, a level last reached in 2017, according to agency statistics.

The Minneapolis-based banking giant is enjoying its biggest year ever for 7(a) lending, with volume up 40%, as borrowers "are still coming to us," its SBA chief said.

The agency admitted navigating the different rules and regulations involved in its four existing lines of credit proved time consuming and confusing and kept some lenders from offering them altogether.

Since the end of the Small Business Administration's 2022 fiscal year, the average loan size in its flagship program has dropped more than six figures. The addition of three new nondepository lenders could further drive down this figure.

The unguaranteed loans are secured by one or more first-lien commercial real estate loans. The notes have a break-even default rate cushion of 2.39%.

Investors continued to tap the COVID-19-driven emergency facility for SBA loan pool purchases, secondary CMBS notes, and private SLABS.

More than $1 billion in coronavirus relief went to small businesses that received multiple loans and a congressional subcommittee analyzing the Paycheck Protection Program says it has seen evidence of fraud in thousands more loans.