Coming off record loan volume in fiscal 2011, the Springfield branch office of the U.S. Small Business Administration is working to beat its benchmark by the time fiscal 2012 draws to a close.
In fiscal 2011, the Springfield SBA branch office backed 422 loans for $162.8 million, a record volume. Patricia Brown-Dixon, regional administrator for SBA’s Region 7, the local branch had closed 155 loans for $55 million as of March 9, aiming for loan volume of $200 million by Sept. 30, when its fiscal year ends.
Brown-Dixon said most of the loans to date – 140 of the 155 – were guaranteed 7(a) loans totaling $45.5 million. And 68 of those loans were less than $150,000 for startup companies.
Liberty Bank, which led the Springfield area in SBA loans in fiscal 2011 – its 14th consecutive year at the top – closed 156 loans for $55.5 million, with volume coming from a mixture of new business startups and building purchases.
“We think it is based on the economic trend of new businesses wanting to come to Springfield,” said Scott Tumlin, Liberty Bank’s chief credit officer and senior vice president.
Tumlin said vacancies in some areas have driven down commercial real estate values, and rental rates may be increasing, making property purchases attractive to some business owners. Other borrowers, he said, are simply seeking working capital.
That was the case for Do Outdoors Inc., a two-year-old company that sells fishing gear. CEO Lynn Reeves began looking last year to refinance a $2 million loan the company had with Springfield First Community Bank.
After applying with several banks, Reeves said he went to Liberty Bank in October, securing an SBA-backed loan for $3.2 million, with an interest rate of roughly 4 percent.
“There was other financing, but the interest rates were high and with investors, we would have had to give up a part of the company,” Reeves said. “Without the SBA loan, it would have been difficult to continue.”
Reeves said the 10-year loan was approved in about 60 days as a result of Liberty Bank’s ability to approve SBA loans in-house. The funding allowed Do Outdoors to pay off its existing loan and purchase $1.2 million in additional inventory. The financial boost also saved the jobs of the company’s 20 employees, he added. And although the company didn’t turn a profit in 2010 or 2011, Reeves is forecasting profits of $500,000 this year.
“We will continue to grow now, and we plan to hire even more people in the next few months,” he said.
Brown-Dixon said 15 of the 155 loans written this year, for a total of $9.4 million, are 504 loans designed to finance fixed assets such as land, building and equipment. Ken Lueckenotte, executive director for Rural Missouri Inc., a Jefferson City-based nonprofit organization that makes 504 SBA loans statewide, said RMI has closed 10 loans totaling $5 million in the Springfield area this year and has 10 additional applications pending. It closed 25 loans for $9.6 million in 2011.
Lueckenotte said RMI officials expect to close more SBA loans this year, which he attributes to increased confidence in the economy and more business owners taking the opportunity to invest.
In October, the 504 program was changed to allow for 100 percent refinancing, and Lueckenotte said that also is increasing the number of applications.
“The basis of the 504 loans has to be on job creation or job saving,” Brown-Dixon added. “Every time we close one of these loans, a job is created or saved.”
Liberty currently has 50 SBA loans approved this year totaling $18 million. Scott Tennison, senior SBA lender and assistant vice president at Liberty, said he expects the bank to match last year’s total.
Guaranty Bank, which closed 13 SBA loans for $16.2 million last year, has closed one SBA loan this year totaling $500,000, said Micah Scott, small business banking officer at Guaranty.
Scott said the bank has several applications for about $5 million in the works, but those loans have not yet closed.
“They come in bunches,” Scott said. He noted that Guaranty Bank’s recent designation as an SBA-preferred lender, which allows the bank to approve loans in-house, will facilitate more loans.
Brown-Dixon said the push for increased SBA lending isn’t unique to the Ozarks.
The nationwide $30.5 billion loan mark hit in fiscal 2011 is the highest in the federal agency’s history, surpassing its previous record of $28.5 billion set in fiscal 2007, and she said $350 million in SBA loans nationwide are being closed daily.[[In-content Ad]]
