The November edition of my blog is late, and here we are into December with Christmas lights up and Mariah Carey seemingly everywhere. The reason for my tardiness isn’t being overly lazy or busy; I was merely awaiting the appointment of a new US SBA administrator which, at the time of this writing (early morning Sunday, December 1), hasn’t arrived.
The topic of this month’s blog is “The Next Four Years,” and I will qualify it by saying that who the President name as SBA Administrator could change the outlook. Which is actually what the headline should be: “Operating in an Uncertain Environment.”
There is a time and a place to talk politics, and this is neither. But as a large-ish SBA lender, we can’t pretend politics aren’t on our minds. It is. Constantly. The SBA was created on July 30, 1953, by President Eisenhower with the signing of the Small Business Act. Since then, with wide support among both political parties and all government branches, the SBA has been a critical contributor to the creation and support of small businesses and their employees. So, it is only natural to ask what the outlook for SBA is with a new administration.
I don’t know.
It is more difficult than ever to guess (never mind predict) what the various factions in the Executive and Legislative branches are thinking and what actions they will try to take. The SBA was never as important and effective as it was during Trump’s first term, working with Congress, Treasury and the Fed to deliver emergency funds through PPP and EIDL and I am hopeful that it will continue to do that for the next four years (and beyond).
But as any business owner knows, planning, even in the time of uncertainty is critical. With that in mind, here are my expectations:
- The economy will continue to roar. As it has done in the past few quarters, with unemployment low, inflation in check, and solid GDP growth, the new administration doesn’t have to try very hard to maintain the current trajectory. If deregulation takes effect, taxes are cut, and we step back from some politically-driven policies, the economy has the potential to grow even faster.
- Price inflation may rear its head again. With the combination of low unemployment, solid growth and the continued rise in asset values (think home prices and their impact on rent), it won’t take much to raise the CPI above comfortable levels. I am especially wary of the potential impact of misguided tariff and immigration policies. I am encouraged by the appointment of Bessent to Treasury and continued stability at the Fed.
- The crypto bubble. Putting aside my opinion on crypto (hint: it’s a scam), it is behaving like a bubble. And you know what happens to bubbles. To the extent that some of our customers are holding crypto on their balance sheets or playing in that vast casino, we consider the unknown prospects of the currency when evaluating a potential loan. On a macro-level, the larger crypto gets the more chance we have for contagion when the bubble bursts.
- I’ll be surprised. I am fully expecting to wake up to news and scratch my head at least once or twice a month. My plans take volatility into consideration by applying healthy safety margins to everything I do.
In summary, I am excited about the continued strength of the economy and the ongoing role of small businesses within it. I am hopeful that during Trump’s second term and with a supportive Congress, the SBA program will continue to thrive. Finally, I am wary of disruptions and distractions.
“Foot on the accelerator with both hands firmly gripping the steering wheel.”
When you or your clients are considering an SBA loan, please reach out to our experienced team of SBA lending professionals. You can find their contact information here: https://gulfcoastsba.com/our-people/. We are always monitoring the latest developments in SBA lending and will work with you and your clients to put together the most advantageous deal structure in the current environment.