Although the SBA has existed for 56 years, the agency is subject to frequent changes in funding and program policies. Since these changes often negatively affect the availability of SBA loan guarantees, the agency struggles to remain a useful source of assistance in obtaining financing for small businesses. Access to seed capital for small businesses is the raison d'etre of the agency but in recent years the number of banks offering SBA guaranteed loans has diminished considerably. Some of this is due to the shrinking spread between LIBOR and prime rates, diminishing bank profit margins considerably. Additionally, much can be attributed to the morass of paperwork and regulation that require banks to increase expenses to hire and train personnel specializing in SBA guaranty business. Lower profits and increased expense are no incentive for banks to participate in SBA programs.

Here's an overview of the more significant recent trends in SBA program loans during FY 2008:

• The SBA guaranteed a record nearly 100,000 business loans to small businesses in FY 2007 but this declined a substantial 30 per cent in number for FY 2008, largely due to the global tight credit environment.
• The dollar value of these loans declined 13 per cent from $20.6 billion for FY 2007 down to 18.0 billion in FY 2008;
• Average loan size increased to $183,000 in FY 2008 from $142,000 in FY 2007;

The SBA's total budget request for FY 2009 of $657 million was 15 per cent over the prior year due to funding for disaster loans. (President Obama's American Recovery and Reinvestment Act provided $730 million for 2009, creating expanded microloan and guarantee programs, improved technology and increased staffing.) During the Clinton administration their budget was $1.1 billion. This lack of funding plus global credit limitations and failure to modernize programs and goals for emerging business models have all contributed to the SBA's loss of effectiveness.Their handling of the Katrina disaster program was less than stellar but major improvements were made with the Iowa floods in 2008. Disaster assistance is a big priority with the Obama administration and this may help the SBA get more adequate funding going forward.

In the area of entrepreneurial development, the Small Business Development (SBDC), SCORE and Women's Business Centers (WBDC) were reauthorized but still under-funded. But Congress has exhibited dissatisfaction with the SBA's lack of ability to control government contracting problems surrounding the mandatory award of certain opportunities to small business entities. The SBA has insufficient personnel to manage the level of oversight expected of them. Hopefully that may be remedied soon.

In addition to the unusual 100% guarantee for the new leverage assistance and expanded microloan programs, the SBA guarantees as much as 85 to 90 percent on loans of up to $150,000 and 75 percent on loans of more than $150,000. In most cases, the maximum guaranty is $1 million. There are higher loan limits for International Trade, defense-dependent small firms affected by defense reductions, and Certified Development Company loans.

Several web sites have recently been created by the SBA to address special concerns of small businesses. These include one aimed at mitigating economic injury caused to a business by the callup of military reservists, and a site rendered in Spanish.

A program called Patriot Express was initiated as a help to veterans and other military related people to launch new small businesses.

Small businesses that might otherwise have difficulty securing private equity or venture capital may find it easier to get due to changes made in July 2009 as part of the American Recovery and Reinvestment Act (ARRA) to the U.S. Small Business Administration's Small Business Investment Company (SBIC) program. And surety bonding guarantees for small contractors doing government work were also made available up to $10 million in mid-2009.

The long term future of the SBA under the Obama administration is not clear. Some recommend abolishing the agency, some tout re-organization, many experts suggest a cabinet level small business advocate would be more effective and less expensive. Time will tell.

• SBA financing for small businesses
• Looking ahead for the SBA