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June 5, 2020   /   West Town Bank & Trust

In our latest analysis of the top 40 industries, Engineering Services (NAICS Code: 541330) ranked #20.  From October 1, 2009 to September 30, 2019, the number of SBA loans for engineers reached 3,248 totaling roughly $1.15 billion.  While “engineering services” is a broad category covering many types of engineers, the need for capital and the value of SBA financing is similar across all engineering categories.

One common misconception is that the SBA lends directly to small businesses. Rather, the SBA 7(a) Loan Program partially guarantees loans made by banks or other direct lenders to eligible small businesses. The program aims to promote economic growth by encouraging lenders to partner with businesses that may be struggling to secure financing on reasonable terms. As a result, SBA loans tend to have low monthly payments, low interest rates and little to no collateral requirements.

According to the U.S. Department of Labor, the employment of industrial engineers is projected to grow by approximately 10% by 2026.  With this projected growth, access to capital is a very real need for many engineering firms and it’s critical that engineer entrepreneurs understand common event-driven scenarios and key trends surrounding SBA loans.

Common Ways Engineers Put SBA Loans to Use

Many of the demands listed below are the result of changing practices and technology in the engineering field.  While these concepts are vital to growing the industry, many of these scenarios require up-front costs and a potential need for capital.

  • Attracting Talent – The demand for highly-skilled, certified employees has dramatically increased since the Great Recession, forcing companies to increase salaries to attract and maintain quality talent.
  • Technology – New and more efficient technology continues to emerge. Its usage is not only becoming more popular but necessary for many firms to maintain consistent growth.
  • Green Practices – Demand for environmental consideration continues to increase and many firms are paying for their employees’ Leadership in Energy and Environmental Design (LEED) certifications.
  • Business Acquisitions – Changing demographics and the retirement of professional service firm owners create an opportunity for business acquisition and expansion.

With SBA 7(a) financing, engineering companies can continue to grow alongside the trending demands of today’s marketplace.

Volume Trends: In FY2018, engineering firms obtained more than $143 million through the SBA 7(a) Loan Program, making this the year with highest dollar volume authorized to engineering firms over the last decade.
Key Statistics & Trends

About West Town Bank & Trust

At West Town Bank & Trust, our most important goal is to understand what’s important to you, what’s getting in your way, and what you hope to achieve, so we can help you get there. Since 1922, we’ve been creating long-lasting relationships with our customers based on old-fashioned values and future-thinking ideas.  Whether solutions come from surprisingly innovative tools or trusted products you’re familiar with, our single-focused purpose is your financial well-being.