SBA Seeking Bankers Assistance

June 11, 2004
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GRAND HAVEN — Wanting to drive more local decision-making, a U.S. Small Business Administration lending group is assembling localized loan committees that will review and judge loan applications from small and start-up businesses.

Lakeshore 504 will have separate lending committees for loan applications handled through its northern office in Grand Haven, southern office in Holland and in St. Joseph/Benton Harbor.

The announcement came recently from Ed Garner, business development manager.

Garner — also the vice president of economic development at The Chamber of Commerce in Grand Haven who provides administrative support for Lakeshore 504 — said additional local lending committees are possible in Kalamazoo/Battle Creek and Grand Rapids.

He explained that the idea is to have applications judged by people who have a greater familiarity with the local market and business environment, and perhaps even the applicant or the applicant’s business.

Lakeshore 504 loan applications are now reviewed by the organization’s entire board of directors that consists of members from a wide geographic area.

Garner said creating lending committees will make Lakeshore 504 more responsive to borrowers.

“Basically, we’ll have local people making local decisions,” he said.

“They have a little more history and a little more feel for making these lending decisions,” Garner said. “It gets us a little more at home with people who know the local market.”

Lakeshore 504 is now recruiting representatives from local banks to serve on the lending committees.

One of seven certified development corporations in Michigan that administer SBA loans, Lakeshore 504 is setting up the loan committees as it adjusts to territorial changes implemented last year.

Rather than confining certified development corporations to work within territories, the SBA in 2003 removed all boundaries to allow each certified development corporation to serve clients from around the state.

Previously, Lakeshore 504 wrote small business loans only within a seven-county region.

The southern office — housed at the Holland Area Chamber of Commerce — served southern Ottawa, Allegan, Van Buren, Kalamazoo, Berrien, Cass and St. Joseph counties. The northern office, at The Chamber in Grand Haven, serviced northern Ottawa, Oceana and Muskegon counties.

The removal of territorial boundaries means certified development corporations can compete with one another for clients.

Garner explained that competition means Lakeshore 504 needs to process loans faster and more efficiently and become more responsive. He believes localized lending committees will help accomplish those objectives.

“It’s all about being a little more competitive and a little more customer-friendly,” he said.

The SBA, working through groups like Lakeshore 504, can provide small and start-up businesses up to $1 million in long-term, low-interest financing.

It also can lend up to $1.3 million in certain circumstances such as revitalizing a business district, rural development or if the borrower is a minority enterprise.

SBA funds would cover 40 percent of a project’s costs.

A borrower must first secure 50 percent of what he or she needs from a private lender and provide 10 percent of his or her own capital.

Loans are for projects of at least $125,000 and can cover the costs to acquire or upgrade a building and purchase machinery or equipment with a minimum 10-year useful life.

In the 2003 fiscal year that ended Sept. 30, Lakeshore 504 processed 25 SBA loans totaling $11.3 million, second best of the seven certified development corporations the state. Through May 31, eight months into FY 2004, Lakeshore 504 closed on 10 SBA loans totaling $3.4 million. 

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