SBA posts upswing in lending for June

August 7, 2009
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With June's U.S. Small Business Administration loan tallies in, it seems that SBA-backed lending is regaining ground.

The first six months of the SBA's fiscal year, which began in October, resulted in a 66 percent drop in SBA-backed lending compared to the number of loans made in the same month in the previous year.

This June, SBA District Director Richard Temkin said 112 loans were made statewide through the SBA's popular 7(a) program, up from May and April, when 102 were made.

“Last June we did 154, so we're closing the gap ever so slightly,” Temkin told Crain’s Detroit Business reporter Nancy Kaffer for a Bridging 96 story.

In the first six months of its fiscal year, the SBA backed an average of 65 such loans a month.

Temkin has pointed to changes made on the federal level through the American Recovery and Reinvestment Act as a catalyst for the uptick in lending.

SBA-related provisions of the ARRA, commonly called the stimulus package, allowed the SBA to raise the percentage of loans it guarantees to 90 percent and eliminate borrower fees. Before the change, the SBA guaranteed 75 percent to 85 percent of a 7(a) loan.

Another new program announced last week increased the investment funding available through the SBA's venture-capital program to licensed Small Business Investment Companies.

SBICs are SBA-licensed and regulated but privately owned and managed venture-capital firms that use a combination of funds raised from private sources and money raised through the use of SBA guarantees to make equity and mezzanine capital investments in small businesses, according to a statement released by the SBA.

Other new changes to SBA-backed lending include a stimulus package provision that allows business owners to refinance loans made through the SBA's 504 loan program for fixed assets.

Statewide, the SBA backed 11 504 loans, Temkin said, down slightly from May's 13.

“I would expect the numbers to continue to improve, but there are so many variables out there in the greater economy, with what's going on with General Motors Corp., Chrysler Group LLC, the automotive suppliers,” Temkin said. “It's very difficult to see the future.”

Bridging 96 is a collaborative effort between Crain's Detroit Business and the Grand Rapids Business Journal. Named after I-96, the interstate that links both sides of the state of Michigan, Bridging 96 looks at the ideas, initiatives and interests that tie the east and west coasts together. See Bridging96.com.

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