AmiSight 3/5: Tighter SBA Lending Helps Fuel Alternative Lending

Small business owners today operate within two distinct yet increasingly interconnected capital systems. The first, SBA, is structured, regulated, and taxpayer-backed. It moves deliberately. It asks for tax returns, projections, personal financial statements, and explanations. It is built around the idea that capital should be repaid over time from sustainable cash flow. The SBA’s mission is clear: expand access to capital so small firms can succeed. But loans must be repaid, or taxpayers absorb the loss. Access and accountability have always coexisted uneasily.

The SBA’s flagship 7(a) program has grown into a major channel of small-business capital. In fiscal year 2024, the SBA approved approximately 70,242 7(a) loans totaling about $31.1 billion. In fiscal year 2025, approvals rose again — to roughly 77,600 loans totaling approximately $37 billion. A little more than a decade ago, annual 7(a) approvals were closer to $19 billion. The program has expanded materially in both size and reach, including a meaningful share of smaller-dollar transactions — often $150,000 or less — precisely the type of capital that growing businesses depend on.

During the Biden Administration, the SBA sought to simplify lending, particularly for smaller loans. This was based on sound reasoning: If the process is too complex, only the most sophisticated businesses will qualify. Reducing friction increases inclusion.

Yet lending still has gravity. Head over to my 21Hats column to continue reading.

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