Small Biz: The Backbone of US Economy

By many accounts, Small Business’ has become the backbone of the US economy. It employs many of our friends and neighbors, collects taxes for our local governments and sometimes serves up our favorite burger or beverage. Entrepreneurism is at the heart of it all. Individuals willing to take the risk to make it on their own and start their own venture is truly honorable undertaking.

I tend to read a lot about Small Business and commercial lending trends. In a press release from October 15, 2018, I noticed that the Small Business Administration guaranteed over $30 Billion to small businesses in Fiscal Year 2018. That is an enormous amount of money of helping fuel the economy.

Checking on the SBA’s website, I wondered what happens to all these establishments. Well, about 80% of them make it through the first year. I honestly was surprised it was that high. Looking back a little further about half of those ventures make it through the first five years and only about a third make it their ten-year anniversary. All in all, I think that is a good success rate. However, not all make it through those growing pains, what happens to those businesses? What plans should be in place for those that don’t make it? How can a Financial Institution help? If you protected your institution and your borrower through an SBA guaranty, there still may be light at the end of the tunnel.

I ran across an article on business.com titled “SBA Loan Default: 5 Things you need to know right now” written By Jason Milleisen. I thought the article clearly laid out some the basics of what happens when that idea maybe didn’t work out quite so well. While it is intended to outline the process for the borrower, the information in the article will help bankers shepherd their borrowers through that unfortunate time.

Author Bio

As a Senior Business Process Architect, Kevin Dooley guides implementations for new and existing clients. Dooley relies on his 20 years of Commercial Banking and Special Asset experience to support client success. He provides both strategic and tactical recommendations regarding current credit philosophy and assists financial institutions with implementing and executing credit evaluation and portfolio management strategies.

Dooley earned his bachelor’s degree from Purdue University in Political Science and his master’s degree in Finance from Indiana University’s Kelly School of Business.