SBA to Grant Fewer Loans…But is it Still Good News?

Portions of President Obama’s budget proposal, submitted to Congress earlier this week, are funds to be allocated to the Small Business Administration, or SBA. The SBA is the government agency tasked with facilitating access to capital for small businesses. On Capitol Hill they represent the small business owners across the nation.

 As reported by Entrepreneur.com, the SBA is seeking some $1.1 billion in funding for 2013. This includes $949 million for general functions of the agency and $167 million for the Disaster Loan Program. That total is a 20% increase compared with the current year.

In this same proposal, the agency is asking for the authority to reduce the amount of loans to small businesses than the current year. The agency would back $3 billion less in loans. Part of the SBA’s task is to administer low-interest loans to businesses, renters and homeowners in disaster areas.

The SBA wants to drop the authorized cap on the agency’s most popular programs; the 7a loan program and the 504 loan program. It is proposed that the cap on 7a drop from $17.5 billion to $16 billion and the 504 program drop from $7.5 to $6 billion. Still the agency is seeking a government subsidy increase of 67% to pay for the loans it expects to make in 2013.

Some say the adjustments to the budget are simply a sign of returning to times of pre-stimulus money. Stimulus measures had temporarily made SBA loans convenient for both lenders and borrowers.  The decrease in fees for lenders and the increase of the amount the government would guarantee became very attractive. Founder of Coleman Publishing and small business expert Bob Coleman says on the news, “They are going back to pre-stimulus numbers.”

Many wonder how this new proposal will affect small business owners or aspiring business owners. In a strained economy, many people are looking for options to supplement income. The number of new businesses is increasing as people are branching out to flee the job market. However, as it sounds it may become increasingly difficult to receive government funding for a small business.

The Internet has become the answer for many new business owners. The growing popularity of affiliate marketing and e-commerce are creating a new age entrepreneur. These business owners take to the Internet to access the millions that log on everyday. With the right sets of tools and knowledge these entrepreneurs use that access to earn income for themselves. There is even a growing market of professionals showing people how to do it.

Prominent Internet training company Net Consult Co. is a leader in affiliate marketing and e-commerce. According to the Net Consult Co. website, “…millions of people log on to the Internet everyday. With all these users there’s a great deal of marketing potential for online businesses. Net Consult Co.’s time tested methods can help businesses cash in on this great potential.”

Perhaps with the right help from firms like Net Consult Co. (and a loan from SBA to boot), the small-business sector doesn’t have to face extinction from mega-corporations after all.