RESOLVING THE LEDGER
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Current Small Business Administration head Kelly Loeffler is not one to go off script. In an interview with Forbes , the former business executive, Republican Senator from Georgia, and (with her husband, billionaire Jeff Sprecher) major MAGA donor, declared that small businesses are doing far better today than under the Biden Administration, which she characterized as a time of rampant inflation and regulation. She brushed aside concerns over the impact of Trump Administration tariffs, higher fuel costs (due to the war in Iran) and labor shortages (due in part to the Trump Administration’s immigration crackdown) and bragged the U.S. economy is “growing again,” despite recent findings that many small businesses are holding off on hiring .
But in the interview and follow-up emails Loeffler also offered some valuable insights for those looking to use or fund SBA guaranteed loans. Among them:
Here are edited excerpts of Loeffler’s interview with Forbes .
There was some pretty significant SBA loan news not long ago with the decoupling of the $5 million cap from the 7(a) program and the 504 loans [allowing businesses that tap both programs to borrow $10 million], I’ve had several sources ask if there's been any possible movement on raising the $5 million cap, specifically for the 7(a) loans. They point out if the cap was just adjusted for inflation, it could be millions of dollars higher. Has there been any movement on increasing that limit, for SBA 7(a) loans? Is that something that you might support?
I absolutely would. And we’ve been very vocal about returning to the mission of the small business administration. Our loan limits stopped going up in 2010. So 16 years ago was the last increase. And we have decoupled now our 504 and 7(a), two of our core loan products, from being a single loan cap of $5 million to being a cap of $10 million per project, which alleviates some of the friction in access to capital. But we know that building out a factory, which, 98% of all of America's factories are small businesses, (and) we know it costs today much more than $5 million. You look at the cost of robotics and automation and machining, which is all done through CNC machines and software and precision optics tooling, and then training the workers to do that, costs much more than $5 million.
So we’ve been a big advocate of what is the Made in America Manufacturing Finance Act , MAMFA. And it's passed on a bipartisan basis out of committee in both the House and the Senate, and it's passed from the House floor. And so we're hoping for passage as part of defense funding, because a lot of our manufacturing is in support of re-industrializing our industrial base for defense.
We’ve seen manufacturers by the hundreds hit the cap at that $5 million. And certainly we're testing the default rates at every size. We're modeling what that looks like to go forward. So we would just want to make sure that it comports with our commitment to be cost-neutral to taxpayers. That means the loan programs should operate at zero subsidy by taxpayers.
On the numbers regarding the 7(a) loan program, there’s actually been a pretty significant dip between fiscal year 2025 and the current fiscal year. In 2025, there’s just over 63,000 7(a) loans approved and this year it's so far just over 43,000. Why there was such a big dip there?
Well, there’s a number of reasons. First of all, we've had a couple government shutdowns; one of them went for 43 days, probably cost us $2 billion to $2.5 billion dollars in lending opportunity. So that's pretty significant, particularly as we head into the end of the year, and small businesses were trying to establish themselves or plan for the new year.
The second one is, under the Biden administration, they applied a standard called “do what you do.” Now, what does that mean? It meant that underwriting standards that the SBA traditionally upheld to protect taxpayers from defaults were completely eliminated. And people could submit loans and get approvals on any kind of risk framework they wanted to apply to a given loan. It meant a lot of loans got approved that shouldn’t have, loss ratios skyrocketed. We ended that as quickly as we could when we came in.
But in 2025, you saw people rushing to get loans in under that lax underwriting standard. So we managed the agency with an eye toward risk management, not headline numbers. Our first duty is to our taxpayers. And as part of the Trump administration, we have a major focus on waste, fraud, and abuse. And these were abusive lending practices that needed to be ended. So we continue to focus on the quality of the portfolio as opposed to quantity.
There was also a fairly significant rule change just in March this year around SBA loans for non-citizens . I’ve had several different sources raise that and ask what the impetus was? And what’s the impact it may have had so far? Are there any possible changes to that policy in the near future?
When we came in, the practice of the agency was to test 81% of the ownership, and there was 19% that wasn’t reviewed. And what we found was, in order to protect taxpayer funds, we wanted to look at the entire stack of ownership in a government-guaranteed loan that was going to a business. And this is where we discovered that foreign nationals were getting loans. And I think as we've rolled this out, the American people have been shocked to see that part of the business was guaranteeing loans to non-citizens. And so this is a part of the commitment of this administration to putting Americans first, and to be an American citizen not only comes with rights, but it comes with responsibilities. And we think they should be prioritized in government-guaranteed lending. And so we've not had a tremendous amount of pushback, and we've had a tremendous amount of support, coupled with a decent amount of shock that the agency was guaranteeing loans to non-citizens in the first place.
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