One of President Trump's least controversial nominations is former pro-wrestling magnate Linda McMahon to head the Small Business Administration, an agency that fits Trump's vision of government-backed capitalism.
SBA, funded partly by loan fees, spreads taxpayer-backed loan guarantees for Dunkin' Donuts shops, dentist's offices, microbreweries, T-shirt printers, and machine shops into congressional districts across the United States.
While other Trump picks have taken flak, McMahon won bipartisan support in an 18-1 Senate committee vote on her nomination Jan. 24. Not bad for an agency that critics of federal subsidies used to want to strangle.
"I recall when Reagan tried to cancel it. He got such an overwhelming response, he backed off," said Gerry Banmiller, CEO of Collingswood-based First Colonial Bank, which makes an SBA loan, on average, every month to beauty parlors and funeral homes, breweries and contractors, stores and print shops.
It's a popular program, and Banmiller hopes McMahon "will grow it. She's a very aggressive person."
"Republicans used to oppose it quite a bit, as a subsidy program. But SBA is one of those things Trump hasn't said anything against," agreed Rohit Arora, cofounder of Biz2Credit, a New York firm whose software platform is used by Citibank and Wyomissing-based Customers Bank to speed SBA applications.
SBA is especially popular with Chinese and Indian immigrants, who are buying small firms from baby boomers ready to cash out, Arora added.
Since 2000, new loans through the agency's 7(a) loan-guarantee program, used mostly to buy or expand new businesses, have grown at more than twice the rate of all bank loans to commercial and industrial businesses, as tracked by Federal Reserve data.
The program approved a record $24 billion to firms in 2016, five years after the Obama administration boosted the loan limit to $5 million, from $3 million.
The average SBA loan is larger than before the recession, but the number of new loans has not yet recovered to prerecession levels. The loan loss rate more than doubled for loans made in 2005 and 2006, as property and collateral values plunged during the subsequent recession. Losses have dropped below previous levels since then.
Last year was also a record SBA lending year for the eight-county Philadelphia area, with 1,059 7(a) loans for a total of $386 million. In Pennsylvania as a whole, however, SBA lending has trailed: Though the state has the nation's sixth-largest population, it was just 13th for approved SBA loans, which totaled $641 million. (Pennsylvania ranked sixth from 2002 to 2005.)
New Jersey, whose population is smaller than Pennsylvania's, ranked 10th for SBA loans last year, with $717 million total.
The loan data -- self-reported by lenders -- "doesn't lend itself to easy conclusions," said Michael Kane, SBA's deputy director for the Eastern Pennsylvania District, which includes the Philadelphia area.
The agency, he noted, tends to finance new businesses, and business formation may be most rapid in states with younger populations and more immigrants. Pennsylvanians are among the most geriatric Americans, and economic growth in the state has been half the national average since the Great Depression. New Jersey, meanwhile, attracts more immigrants.
Though restaurants -- both franchise fast-food stops and "full-service" sit-down eateries -- tend to be the top SBA borrowers, there are regional differences. Compared with the U.S. as a whole, loans in Pennsylvania are more likely to go to child-care and landscaping services and less likely to go to doctors, hotels, and trucking companies, according to an Inquirer review of SBA's 2012-16 loans.
SBA-backed companies reported creating 43,000 jobs in the region in those five years.
"The program is intended to entice lenders to fund small businesses and transactions that need an extra credit enhancement to get them over the hurdle," said Christopher McGill, chief commercial lending officer for DNB First Bank, which ranks among the region's top 20 SBA lenders.
McGill said SBA resembles a small-business version of the Federal Housing Administration's popular program to assist first-time home buyers.
There's a lot of recent interest in SBA loans in the suburbs and Center City, said Andrew Eshleman, district sales manager for SBA loans at Wells Fargo, one of the largest 7(a) lenders in the Philadelphia area. (For the last five years, Wells Fargo has been the second-largest area SBA lender, after TD Bank, in the number of its loans, or the third-largest by value of loans, after Vernon Hill's Republic Bank and Massachusetts-based Berkshire Bank.)
"We're doing a lot of day cares" and doctor's offices, Eshleman said.
For those, "SBA is a perfect tool," he said: If a borrower can meet the guidelines, "there is less money required for a down payment, and we can stretch the term to 25 years, which helps a growing business build cash flow." Without the guarantee, a bank would typically require larger payments and a quicker payoff, leaving less cash for the business and its owners.
Day cares and doctors add up to future growth, Eshleman said hopefully. Local borrowers' tax statements show they have generally become more creditworthy over the last three years, the period bankers review -- for the first time since before the recession.
He noted that, "as a segment of the population, the proportion of immigrants" who apply for SBA loans "is greater than in the general populace."
"We help a lot of small-business owners who are first-generation Americans," Eshleman said. "Business is their way of life," both in upstate cities such as Allentown or Lancaster and in polyglot Philadelphia.
"Asians have been the fastest-growing part" of the SBA small-business market, said Arora, the Biz2Credit cofounder. "East Asians, South Asians, a person who's been in business two or three years" can scrape together cash, get a loan guarantee, "and go buy a liquor store, a gas station, a franchise, an auto-body workshop with a 7(a) loan."
Arora also noted that tighter international bank capital guidelines, which threatened to make it tougher for banks to finance SBA loans, helped persuade the program's managers during the Obama years to raise loan limits and start the new smaller-loan program -- which he hopes will graduate businesses to larger loans and bigger operations.
Note: Listed below are SBA 7(a) loans in the eight-county Philadelphia area, 2012-2016, by county and lender: