Honor A Natural For Kent Commerce
He also told the Business Journal, however, that the award arises not so much out of trying to advance the SBA lending program, but because SBA loans often make sense for the types of firms that Kent Commerce specializes in serving.
“Ninety percent of all businesses fall under the SBA definition of being small businesses,” he said, “and small businesses are our area of expertise. Our staff are small business lending veterans.”
And, he said, it so happens that Kent’s focus happens to closely parallel that of the SBA.
“SBA is all about job creation,” Veen said. “That’s their primary motivation. And if they can help a small company achieve its goals, which include the retention or creation of jobs, they are extremely motivated to do that.”
So is the bank, he said.
SBA loans, he explained, are simply bank loans with varying percentages of federal loan guarantees. “They have different programs with guarantees of 75 percent, 80 percent and 85 percent. The interest rate is set by the bank and a percentage of the loan is guaranteed by SBA.”
The honor that SBA conferred upon Kent Commerce, Veen explained, is the honor that SBA grants to the top producer among what it calls non-PLP lenders.
“This is the award to the non-preferred SBA lender,” he said, noting that it should not be confused with an honor bearing a similar title that SBA recently conferred upon National City Bank, also for fiscal 2001.
“Kent Commerce is a non-PLP member and they (National City) are a preferred SBA lender. The PLP lenders are much larger banks that can specialize in SBA lending,” Veen explained.
“This particular award that came to us is for smaller banks,” he added.
He said the award criteria relate to the number of SBA loans the bank made, the amount of the loans, and the increase in production of those loans over the preceding year. He said the honor also reflects the quality of credit: that is, the number of Kent-originated loan applications that the administration actually approves.
Nonetheless, the Grand Rapids native added, “SBA loans are not a dominant part of our business.
“It’s just that most of what we do is small business-oriented. And so where SBA loans are appropriate for a customer, we tend to go that route.”
He said the build of the firm’s SBA loans are to expand existing businesses rather than start new ones.
“Start-ups as a rule are more difficult to do,” he explained. “And then there simply are more existing businesses than start-ups.”
He explained that Kent Commerce has been a small business bank from its inception five years ago. It is one of 11 banks in the state, each with its separate president and board, founded under the aegis of Capitol Bancorp.
“I think we’ve built a pretty strong reputation for knowing what we’re doing in serving that small business niche,” Veen said.
“I believe we’ve done very well and it’s only because I’ve been able to attract the finest group of bankers out there. We’ve been very successful. And, actually, at times we’ve had more demand than we’ve been able to keep up with.”
Veen said he believes Kent Commerce has special credibility with small business because the bank itself happens to be such a recent start-up.
“It really gives us an advantage in dealing with people who are starting or recently started up. Obviously, they’re entrepreneurs and we can clearly relate to them because we’ve been there and done that — starting from scratch.”
He said the sort of prototypical firm with which Kent Commerce works tends to have annual revenues of less that $20 million to $25 million in gross sales, is locally based and closely held, and tends to operate within the West Michigan market
“You can rent money anywhere,” he added.
“But with a small bank, business people really have personal access to the people who are making the decisions.
“They get a lot more input from a smaller community bank than from the big boys,” he added.
“That’s valuable to them,” Veen said. “Small business owners are kind of on their own most of the time, and getting some advice and having another set of ears and eyes from an experienced banker — a service you don’t have to pay for — is valuable to a lot of business owners.”
He said Kent Commerce necessarily is a relationship type of operation.
“People here in Grand Rapids — in West Michigan in general — really appreciate that. The small business owner particularly appreciates the high-touch service they get with small banks.”