One of the great responsibilities of a banker — and a source of much satisfaction — is to support Utahns who have dreams to start small businesses and help them achieve their goals.
Zions Bank has helped thousands of people obtain capital so they could start and expand small businesses. These enterprises provide jobs, purchase millions of dollars in goods and services and greatly contribute to local and state economies. Small businesses are really the economic foundation of Utah.
As we serve the financing needs of small businesses, we have a very important partner — the U.S. Small Business Administration (SBA). Without the SBA, far fewer small businesses would qualify for loans.
Recently, the SBA’s main lending program for small businesses, called the 7(a) program, reached its lending cap. Without increasing the cap, most small business lending would have ended for the remainder of the fiscal year. That would have hurt thousands of small businesses that need access to capital.
As the deadline approached, most members of Utah’s congressional delegation went into action and worked in Congress to increase the cap so small businesses could receive the resources they need. I appreciate the hard work of Utah's Sen. Orrin Hatch and Sen. Mike Lee, along with many other members of the House and Senate and industry leaders, who supported boosting the cap a modest amount, from $18.75 billion to $23.5 billion. Thanks to their efforts, SBA lending will continue.
It’s important for citizens to understand the partnership between the banking industry and the SBA. This partnership has produced immense state and national economic value over many years. Thousands of small businesses have been able to get started, make equipment purchases, obtain real estate, expand inventory and provide good jobs. The benefit to Utah’s economy is almost incalculable.
The SBA/banking partnership is a true success story. Due in part to complex federal banking regulations, bank underwriting policies are quite conservative. It is very difficult for banks to make loans to certain categories of small businesses. But with SBA loan guarantees, many more small businesses qualify for loans. It’s important to note that the SBA does not make the loans and does not guarantee 100 percent of the loans. Lenders like Zions Bank are very much motivated to make high-quality loans to credit-worthy individuals. Both the lender and the SBA are at risk if the borrower defaults.
With backing by the SBA, it has been possible for Zions Bank to support thousands of small businesses, including many owned by minorities, women and veterans. I’m proud to say Zions has been the No. 1 SBA lender in Utah for many years.
Small business is critically important to Utah and the U.S. economy in terms of job creation, technology development and commercialization. By insuring loans to small businesses, the SBA generates enormous economic returns by helping small businesses get funding that would otherwise not be able to raise capital.
This year, as the economic recovery continues, the SBA’s 7(a) program has experienced unprecedented demand from the small business community. The SBA has approved more than 45,000 loans so far this year, a 25 percent increase over the same period last year.
I agree with what SBA Administrator Maria Contreras-Sweet said after Congress increased the lending cap: “On behalf of the Small Business Administration, and the thousands of small and growing businesses, innovators, and entrepreneurs we serve across the country, thank you to the leadership in both the House and Senate for the steps they have taken this past week. As we go forward, we will continue to work with both chambers to ensure that the SBA continues to empower American small businesses as they grow and create jobs to strengthen the nation’s economy.”
A. Scott Anderson is CEO and president of Zions Bank.