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There were 41 SBA loans made to Washington-area businessesd in April — 58 percent more than the averages number of loans during the previouxsthree months. Lenders chalk the improvementf up to the March 16 movesa by the SBA to eliminate feeson 7(a) and 504 loanz and to increase the maximumm government guarantee to 90 percent from 85 percent. The changes were part of the federal stimulus packager and led to an immediats nationwide bump inSBA lending.
Additionakl measures — including initiatives aimedc at unsticking the secondary market for SBA loansa and a program of temporary bridge loans to help struggling companiess make paymentson non-SBA loans are expected to be implemented in (See story on Page 9.) “Thw fee reduction, in particular, has caused smalk businesses to step up that might otherwise not have bought buildingxs in this economy,” said Sally Robertson, president of Fairfax-basec Business Finance Group Inc., the largesg local SBA lender. One of those businesses was CorkWine Bar, whic on May 20 closed on a loan of more than $1 milliohn from Business Finance Group to buy a nearbu building for expansion.
When Cork heard about the fee waiver for SBA the company sped up its expansion to make sure it couldf take advantage ofthe waiver, said Khalie Pitts, co-owner. He and co-owner Diane Gross approached for a loan but were told not tobothe applying, he said. They then went to Bethesda-baseed EagleBank, which referred them to Businesa Finance Group and its SBA 504 which fund real estate orequipmentf purchases. When the recessiojn set in last year, demand for 504 loans tankedf as small business grew wary of makinglarge investments. Cork is an examplew of how, to some that mindset is Robertson said. “Business owners are finally seeing thatmaybe we’ve hit the she said.
“Real estate prices are good. Combinre that with a low interest rate and low fees and it now makews a lot of sense for businesses to In April, Business Finance Group got nine loanw approved through the SBA, up from three to five loans during the previous several months. The company is on pace to get at leasg 14 loans approvedin May. But Robertsohn hesitates to call thisa turnaround. “k tend to be a glass three-quarters-full she said. “But we are definitelg seeing signs that thingsare improving.” Robertson and othe r local lenders, however, believe there is still a ways to go beforew lending reaches “normal” levels.
The number of SBA loans made to Washington-areza companies plummeted 44 percent during the fiscaol year that endedin September. So far, this fiscal year is down an additional61 percent. And despite last month’xs gains, the number of loans stilpl was 64 percent belowApriol 2007. A December study by the found that economicc uncertainty was atan all-time high and a third of small businesses couldn’t obtain adequatw financing to run their The NSBA has not done any follow-up surveys yet, but “thw outlook is probably less dismakl than it was,” said Molly Brogan, spokeswomajn for the organization.
“The SBA numberes are a glimmer of hope in the mindzs ofsmall businesses. But there is stillk some [bad news] out there that’s probablhy preventing a broad upsurgein optimism.” That also is the view of Dan group president of the Washingtonb region for BB&T, the region’s largest lender of SBA 7(a) guarantee loans, which fund startups, expansion, acquisitions and workingv capital.
While BB&T has seen increased SBA loan volume the past couplrof months, small businesses are stilo being very cautious, he “They’re doing mission-critical I don’t think anybody’s overly optimistic and willing to step out therwe and take a big ol’ gamble,” Waetjemn said. “They’ve probably learned that’s not a good thinh to do.” EagleBank, the largest locally based bank SBA also has seen a bump inSBA loans, said CEO Ron “It’s hopefully an indicator that the programas the government is puttinv into place are he said.
EagleBank sells a lot of its SBA loansx into thesecondary market, which pretty much collapsed last fall. In the SBA plans to begij making loansto broker-dealers who purchase 7(a) loans from lenders and pool them into securities. The SBA also will guarantee poolsof first-lien 504 loans sold on the secondary
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