That could mean new financing options for entrepreneurs, particularly in metro Phoenix's fringe suburbs and Arizona's rural communities, at a time when many large banks have shut the door on less-experienced loan applicants.
The government guarantees a portion of each SBA loan, meaning less risk for the lender. "Smaller, community banks are coming into the program and filling . . . gaps," said Robert Blaney, SBA district director for Arizona.
Arizona SBA loan volume and total dollars lent in 2009 are down 62 percent and 65 percent, respectively, over the first quarter last year. The Arizona SBA office has seen a net loss of 25 lenders since September, the majority of which are, or were before mergers or failures, large banks with a national presence.
The only new lenders to replace those lost are small operations such as Avondale-based West Valley National Bank, also serving Buckeye, and soon, the two-branch Yuma Community Bank.
Many community banks are in a good position to make SBA-backed loans because they did not make risky commitments, or participate in the derivatives and mortgage markets the way large banks did.
"(They) were prudent in their lending. They didn't rely on hot money to fund growth . . . and the vast majority are well-capitalized," said Bob Seiwert, a senior vice president with the American Bankers Association.
However, many also lack the training required to participate in SBA programs.
That started to change in fall, after early stimulus discussions, said Bruce Hodgman, deputy director of Arizona's SBA office. Since, he said the Arizona SBA office has enlisted a record number of new trainees. All are small, community lenders.
"I can't think of any other time there has been such a recent request or demand for (training)," Hodgeman said.
New incentives
In the past, the SBA had a tough time getting small lenders to use its products. Seiwert said fees of up to 3.5 percent of a loan's value, as well as time-consuming paperwork, were turnoffs.
The stimulus bill awaiting President Barack Obama's signature today would temporarily waive SBA loan fees and pump millions of dollars into current programs.
Although SBA lender training is free, it can drain time and resources that not all community banks have to spare. Now, some are sinking their own money into that investment if it means nabbing new clients later this year.
"It's a little short-term pain for a long-term gain. I don't know how you can serve the business community and not participate with the SBA in this economy," said Candace Wiest, West Valley National Bank president and CEO.
In addition to the training, Wiest invested close to $10,000 for a consultant to help her write out West Valley National Bank's SBA loan policies, specifically those related to 504 loans. The 504 loans help small businesses buy their offices, land or storefronts and is a category Wiest hopes to specialize in.
"There has never been a better time for small-business owners to buy their own building. Prices are low, and if we get an SBA loan for them the borrower only has to put 10 percent down," she said.
Twice a month, Wiest selects CEOs from 10 local companies and invites them to a private steak dinner to spread the word about West Valley National Bank's new offerings. She prompts a discussion about the state of the economy to gauge their hopes and concerns, then casually mentions the bank's new SBA lending abilities.
Business beneficiaries
Goodyear resident Debra Kent heard about the SBA loan program from a friend of a friend. She opened Golden Apple Skin Laser and Vein Center in 2004, and started shopping for a loan to buy an office suite in October. She currently rents medical space in Litchfield Park.
"I had no idea SBA loans would even be available," she said. "The thing that really shook me up is when my attorney (sarcastically) said, 'Good luck.' "
Golden Apple offers mostly cosmetic treatments, and Kent said business has taken a hit during the recession.
A varicose vein-removal procedure covered by many insurance companies has helped keep her business afloat.
When the economy turns, Kent said Golden Apple would be in a good position to grow. West Valley National Bank is helping her close on a $1 million office space in Goodyear.
Despite increased interest in SBA programs from community lenders, Hodgman said the small outlets are not likely to generate the same amount of loan volume lost over last year.
But Wiest notes, they could make loan money more available to small-business owners on big-city fringes, such as Kent. The lenders often favor clients in their own backyards.
"We see it as economic development," Wiest said.
Reach the reporter at erin.zlomek@arizonarepublic.com or 602-444-6903.
Source: http://www.azcentral.com/arizonarepublic/business/articles/2009/02/16/20090216stim-biz-SBAstimulus.html
No comments:
Post a Comment