November 2, 2012 Leave a comment
The U.S. Small Business Administration’s popular programs that guarantee loans to small businesses were down in Arizona from fiscal years 2011 to 2012.
The gross dollar amount loaned through the SBA’s 7(a) and 504 programs was down from $540 million in fiscal 2011 to $478 million for the year ended Sept. 30, 2012.
Still, the 2012 figure is higher than the 2010 total of $368 million.
The number of loans closed, however, did not follow the same path. That figure increased from about 1,200 in 2010 to more than 1,300 in 2011, then dropped to about 1,000 this past year.
The silver lining during this three-year period is that the average loan size increased steadily each year, from $289,000 in 2010 to $450,000 in 2012.
The SBA’s 7(a) and 504 programs both guarantee loans to small businesses. The former are typically made by commercial banks, while the latter are made by nonprofit economic development corporations.
The figures in fiscal 2011 may have been inflated because of the expiration of incentives in the Small Business Jobs Act, according to lender specialist Craig Jordan of the SBA’s Arizona district office.
The act temporarily gave lenders a 90 percent guarantee of the loan amount and waived all fees to borrowers. The normal guarantee is 75 percent.
“If I’m getting my loan for free … that is a pretty big advantage,” said Wells Fargo regional sales manager Jim Valley, a 20-year veteran of small-business lending. “In fiscal 2012 and the numbers that just came out, none of those things existed.”
Jordan said SBA lending in Arizona totaled about $140 million for the three months ended Sept. 30 — far greater than the $100 million or so the state typically does per quarter.
One factor that may be pushing quarterly numbers higher is the desire by business owners to get out of lease arrangements by purchasing a building. That is a financing need Valley has seen increase in the past 12 months at Wells Fargo. The economics are there to make the switch, he said.
Top SBA 7(a) and 504 lenders for fiscal 2012:
By loan amount:
Wells Fargo Bank: $75,201,100
Business Development Finance Corp.: $34,931,000
JPMorgan Chase Bank: $31,104,200
Metro Phoenix Bank: $30,2889,900
US Bank: $29,264,900
By number of loans:
JPMorgan Chase Bank: 210 loans
Wells Fargo Bank: 183 loans
BBVA Compass Bank: 107 loans
Business Development Finance Corp.: 66 loans
US Bank: 45 loans
Source: U.S. Small Business Administration