Across Ohio, activity in traditional U.S. Small Business Administration lending programs is down 2.4% by volume and 8% by dollars in fiscal year 2020, which ended Sept. 30.
Of course, that comes amid the advent of the Paycheck Protection Program this year, which was administered through the SBA as one of the avenues for disbursing economic stimulus dollars to blunt the impact of an economy-wrecking pandemic on small businesses. With business-supporting capital made available through additional programs such as the PPP, the need for the SBA's traditional 7(a), 504 and microloan products was flat to slightly down compared with the prior year.
Combined, traditional SBA lending, the PPP and Economic Injury Disaster Loan program provided 364,730 loans, totaling more than $24 billion, in Ohio.
Nationally, the same programs provided some 14.5 million loans, totaling more than $764 billion in fiscal year 2020 — more than all SBA activity combined in the agency's nearly seven-decade history.
"It was a historic year for SBA's disaster program, as we approved and disbursed more than three times as many funds for the COVID-19 EIDL program ($211 billion) as we have for all disasters combined in the agency's 67-year history ($67 billion)," said James Rivera, associate administrator for SBA's Office of Disaster Assistance, in a statement. "This was also the first time in SBA history that the agency had the statutory authority to declare a pandemic and make disaster loans."
Amid this unprecedented activity, it remains unclear how many of these loans found their way to minority-owned businesses, which are facing an outsized impact of the pandemic. Stats on this published by the SBA tend to include women-owned businesses in the minority totals, which also only account for loans where details by race were optionally provided.
So while the SBA touts its lending to minorities and in underserved areas, there are obvious shortcomings in what the SBA's own data tells us about participation among racial minorities. More than 30% of borrowers in the 7(a) and 504 programs nationally this past year did not disclose their ethnicity, a detail lenders are not required to collect.
Some lending advocates worry that minority business owners did not have the same opportunities to participate in programs like the PPP. And because of limitations in the data, this is exceedingly challenging to measure. In Ohio, nearly 80% of PPP loans provided did not list borrower ethnicity.
In the traditional SBA programs, 28% of loans nationally went to minorities — that figure is derived from the 70% of borrowers who did list their ethnicities — compared with 32% in the prior year (when 80% of borrowers listed ethnicity).
The availability of data on details like race is important to understanding racial equity in SBA programs, according to Yasmin Farahi, senior policy counsel with the Center for Responsible Lending. She said this summer that collecting that information should be required through legislation, similar to how racial demographics are collected on neighborhoods via the Home Mortgage Disclosure Act.
The largest SBA lender in the Cleveland district, by a huge margin, remains Columbus' Huntington Bank, which provided 873 loans, totaling $107.2 million. The second-largest lender by volume is Cleveland's KeyBank (38 loans, totaling $22.9 million). The second-largest lender by dollars is United Midwest Savings Bank of De Graff, Ohio (14 loans, $23.2 million).
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November 02, 2020 at 11:45PM
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Traditional SBA lending in Ohio dipped this past year - Crain's Cleveland Business
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