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Michael Haldeman turned to the U.S. Small Business
Administration in 2019 when he wanted to start his own business. The West
Ashley resident, then an assistant professor of music at Charleston Southern
University, craved a career change.

Haldeman had started riding bicycles – both road and
mountain – seriously while in graduate school, and he had kept himself busy
during summers when school was out by working in bike shops. He considered
applying for a bank loan to get his operation up and running, but found he
didn’t qualify.

“Banks tend to want you to meet some parameters in order
to get a business loan, one of which is you have to have been in operation for
at least two years, which made no sense at all to me,” he said.

A friend suggested Haldeman consider the SBA, which put
him in contact with what today is the Climb Fund, a Charleston-based community
development financial institution that works with small businesses across South
Carolina. Through the Climb Fund, Haldeman secured an SBA microloan for
$50,000, which allowed him to open SpokeWorks Bicycle Workshop in June 2020 in
Summerville.

Ultimately, Haldeman made good use of the funds, even
though he only drew down a portion of the loan amount.

“We used the money to build out our original space and
build up our inventory,” he said. “I kept the remaining money on hand as a
safety buffer because you never know what’s going to happen.”

In late 2021, with solid financials and more capital in
his pocket, Haldeman refinanced the original loan by securing a loan from a
bank at a better interest rate. That enabled SpokeWorks to move from an
1,800-square-foot site to what today is a 3,300-square-foot site.

Haldeman knows that without the SBA’s assistance he
likely wouldn’t have been able to sprint out of the starting gate, particularly
given that bike shops tend to be inventory-intensive.

“I don’t know where I would
have come up with the extra capital without the SBA, to be honest,” Haldeman
said. “Maybe I would have figured it out on my own, but it was definitely one
of the largest hurdles I had to overcome.”

SBA lending remains a key means for both startup and
existing small businesses to secure funds. For more than 70 years, the Small
Business Administration has been backing and helping facilitate loans for
businesses.

This is critical in South Carolina, where more than 99
percent of businesses are classified as small businesses – those with 500 or
fewer employees, according to Melissa Lindler, the SBA’s district director for
South Carolina.

But the SBA’s job is more than just helping underwrite
business loans, she said.

“We want to help our small businesses plan ahead, help
them to look at things that are critical to their success, such as supply
chains, financials, their target markets, and the importance of being agile in
times of change,” said Lindler, who took over as head of the SBA in South
Carolina earlier this year. 

SBA-guaranteed loans reduce risk to lenders and make it
easier for small businesses to get needed funding. Loans amounts range from
$500 to $5.5 million, and can be used for most business purposes, including
operating capital and debt refinancing. 

Interest rates on SBA loans can be fixed rate or
variable, with details worked out between the lender and borrower.

The SBA offers different products, including:

Its
most common loan program, the 7(a), used by businesses for an array of
items, including expanding operations, refinancing debt, and purchasing
equipment. The 7(a) loan, which has a maximum of $5 million, is offered by
the SBA through traditional banks and credit unions, along with some
specialty lenders;
The
504 loan, which provides long-term, fixed-rate financing for major assets
that promote business growth and job creation. The 504 loans, which can be
for as much as $5.5 million, are offered by certified development
corporations such as the Certified Development Corp. of South Carolina, a
nonprofit that works with the SBA to promote economic development; and
Microloans,
which range from $500 to $50,000, go through SBA-approved
micro-intermediaries. In South Carolina, these are the Beaufort County
Black Chamber of Commerce, Climb Fund, and Community Works. 

Typically for 7(a) loans, the SBA guarantees 85 percent
of the loan for amounts less than $150,000 and 75 percent for loans of more
than $150,000 up to $5 million. Loans are often secured by collateral and
the borrower’s personal guaranty. There is a minimum requirement of a 10
percent equity deposit from the borrower. The SBA guaranty means the lender
does not assume all of the risk should the borrower default on the loan.

SBA 504 loans are typically used for long-term financing
on major fixed assets. With a 504 loan, a third-party lender such as a bank
provides half the loan amount, a community development corporation, backed by
the SBA, puts up 40 percent, and the borrower contributes at least 10 percent,
said Peter Shand, president and chief executive officer of
Columbia-headquartered Business Development Corp. of SC.

For microloans, borrowers will likely have to provide a
down payment of 20-30 percent of the loan amount. The SBA provides funds to
approved intermediary lenders who then make the loans to small businesses.

None of the above loans go directly from the SBA to
entrepreneurs or businesses, Lindler said. The only loans that the agency makes
directly to individuals or businesses are loans for damage after a declared
disaster, such as Hurricane Helene last year.

Fueling growth

South Carolina has enjoyed strong population growth in
recent years, as evidenced by the more than 360,000 residents the state added
between 2020 and 2024. Many of these transplants are either finding jobs in-state,
or bringing jobs with them. That’s good news for SBA lenders.

“A lot of businesses in our state are looking to expand,”
Shand said. “We’ve seen an uptick in activity, and it’s been across a variety
of businesses.”

Some community development companies are even looking
beyond state borders when it comes to making loans.

“What we’re focusing on is how our new environment in
South Carolina is attracting businesses interested in coming to the state,”
Shand said. “There’s a push to bring manufacturing back to the United States,
and South Carolina is a great place for companies to look at because of our
business-friendly environment.”

SBA lending has been healthy in South Carolina over the
past few years, particularly in the 7(a) program. The total number of 7(a)
loans in the state increased by more than 18 percent in FY 2024, and it’s on
pace to top that figure this year.

Last year, 804 7(a) loans were made in South Carolina,
and the average loan size was $543,743. TD Bank led the way with 155 7(a)
loans, while Live Oak Bank lent the most money through the 7(a) program in the
state, more than $36.3 million.

In all, 95 banks made 7(a) loans in the state, including
institutions headquartered in Maine, Ohio, Utah, and Nevada. Several South
Carolina-headquartered institutions made 7(a) loans last year, including
Countybank of Greenwood, Security Federal Bank of Aiken, and the Bank of
Travelers Rest.

Fewer 504 loans are made annually, both in South Carolina
and across the nation. In FY 2024, there were 38 total 504 loans made in the
state, with the average loan amount being $1,323,789. Provident Business
Financial Services of West Columbia led the way with 15 SBA 504 loans, worth
nearly $21.4 million.

The 504 loan program in South Carolina is still off from
the 77 loans made in FY 2021, but it increased from 28 in FY 2023 to 38 last
year, and that figure should be even higher this year. 

Among those who have benefited from a 504 loan in recent
years is Lowcountry entrepreneur Roger Freedman. Freedman purchased the Broad
Creek Marina on Hilton Head Island in 1993. In 2005, he rebuilt the marina and
dry storage barn to better withstand strong hurricanes.

The Great Recession, just a few years later, forced
Freedman to drop plans for housing at the site, so he instead looked to
diversify the location by adding an adventure park.

When the economy began its slow turnaround after 2009,
Freedman wanted to refinance his loan and also obtain financing to move forward
on a zipline canopy tour.

“What he found was local commercial lenders couldn’t
comprehend the success story of Zipline Hilton Head,” according to information
found on Provident’s website. “… coupled with a limited operating history,
Zipline Hilton Head was a risk that most lenders would shy away from having
just emerged from one of our nation’s worst financial crises.”

Working with a traditional lender, Provident was able to
help Freedman secure a 504 loan, enabling him to refinance an expensive loan
and gain capital needed to build out Zipline Hilton Head.

“Provident helped uncover commercial lending solutions of
which I wasn’t even aware,” Freedman said. “They streamlined the lending
process in order to position the Zipline for success in a market that isn’t
very welcoming to new and unique businesses.”

Freedman’s site has continued to thrive and today is also
home to Adventure Hilton Head, which includes GoKart Hilton Head and Up the
Creek Pub & Grill.

Joint effort

Lindler said her agency couldn’t do all that it does
without some assistance.

The SBA works with resource partners such as the Small
Business Development Center, or SBDC; Service Corp. of Retired Executives, or
SCORE; and Veteran Business Outreach Centers.

The SBA also relies on APEX Accelerators (formerly known
as Procurement Technical Assistance Centers), which help business executives
better understand the contracting process, particularly with the U.S.
Department of Defense.

“APEX provides assistance to businesses that want to sell
to the government – the federal government along with state and local
governments,” said Lindler, an Irmo native who joined the SBA from the
Southeast Crescent Regional Commission, a South Carolina-headquartered economic
development partnership agency of the federal government and seven Southeastern
state governments.

The assistance is essential to Lindler, as the U.S. Small
Business Administration has undergone change since the beginning of President
Donald Trump’s second term early this year.

In March, it was announced that the SBA would begin an
agency-wide reorganization, in part to eliminate wasteful spending and restore
its mission of empowering small businesses.

As part of the overhaul, the agency announced it would
trim its workforce by 43 percent, eliminating non-essential roles and returning
to pre-Covid staffing levels.

For Lindler, that meant having her South Carolina
operation move from eight employees to four, with the departing workers taking
early retirement.

Many of the changes will simply bring the SBA back to
standards that were in place during the first Trump Administration. This
includes higher credit standards for borrowers and requiring business buyers to
put down at least 10 percent equity for loans.

The new regulations also require all SBA loan recipients
to be U.S. citizens. Previously, it was possible for individuals with green
cards, individuals seeking asylum, and businesses with a majority citizen
ownership – but not 100 percent citizen ownership – to secure SBA financing.

The SBA’s South Carolina office hasn’t gotten any
complaints or inquiries regarding the new credit and citizenship guidelines,
Lindler said.

The Trump Administration’s modifications make it easier
to change business ownership and finance acquisitions through SBA loans,
according to Bankrate.com.

Also, the SBA has paused its Community Advantage Small
Business Lending Company program – bolstered under President Joe Biden – which
relaxed underwriting standards and allowed an array of non-bank, non-regulated
lenders to distribute funds, including nonprofits.

Over the previous year ending in May 2025, the program
saw a nationwide default rate of 7 percent. If a borrower defaults on an SBA
guaranteed loan, the agency assumes the obligation, which means taxpayers are
on the hook.

The popular 7(a) program saw an increase in loans in
default or delinquent to 3.7 percent, the highest since 2012. Figures for South
Carolina defaults were unavailable, according to Lindler.

Finally, there’s been talk about doubling the maximum
size of some SBA loans.

A bill introduced in May in the U.S. House of
Representatives would raise the cap on 7(a) and 504 loans from $5 million to
$10 million, but only for manufacturers.

SBA Administrator Kelly Loeffler has said that doubling
SBA loan limits for small manufacturers will supercharge “the return of
American industry by giving small businesses the capital they need to expand,
hire, and compete.”

If the bill passes, it will open up a lot of
opportunities for small businesses interested in relocating to South Carolina,
according to Shand, of the Business Development Corp.

While change may present both challenges and
opportunities, the SBA’s charge remains the same, Lindler said.

“We’re here to implement the mission of the SBA: To
support and empower small businesses and provide assistance during the economic
recovery of communities after disasters,” she said.

Lindler added that her success – and that of the SBA in
South Carolina – is dependent on understanding the needs of Palmetto State
entrepreneurs and small businesses. 

That means getting out, meeting business owners, and
working alongside other federal, state, and local partners to provide the tools
and resources needed for small-business growth and development across the
state.

“We can’t truly support small businesses without first
understanding their challenges and barriers to success – and that’s why
listening and working in collaboration with our partners is so critical,” she
said.