Banking & Finance, Economic Development, and Small Business & Startups

Entrepreneurs’ waning appetite for risk dampens SBA loan activity

Number of options for small businesses has put market on hold.

September 9, 2016
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A larger number of options and tepid entrepreneurs have led to a dip in Small Business Administration lending at Huntington Bank.

Often the largest provider of SBA loans in the state of Michigan, Huntington once again tops the Business Journal’s list of top area SBA lenders, issuing 904 loans in Michigan worth $95.9 million during a 10-month period from Oct. 1, 2015 through July 31, 2016, according to information provided by the U.S. SBA Michigan district office.

But Michael Moraw, vice president and senior SBA product specialist at Huntington, said the number of available options out there for small businesses to receive funding has put the market for SBA loans on hold.

“I think there are a lot of folks sitting on the sidelines that might have general economic concerns with the elections coming up or are reading the paper about the next recession coming, and that causes pause for people thinking about investing their life savings into a business,” he said.

While small business owners play the waiting game, Moraw said Huntington isn’t concerned about declining numbers. Instead, he said the bank will focus on leading in the markets it operates in and finding ways to continue saying “yes” to the business owners that do come in looking for a loan.

As far as working to increase the amount of loans Huntington issues, Moraw said it’s a matter of trying to increase awareness of the SBA’s programs and finding ways to determine if an SBA loan is right for a business.

“It’s making folks from top to bottom aware of these options, asking if they’ve thought whether or not an SBA loan would be a fit for them,” he said. “Whether it’s one by one, I don’t think there’s anything different we’re doing right now, but just to let them know that there is this option can help.

“We’ve been embracing the program; we do SBA loans, and we’re very good at it.”

Additionally, Huntington’s recent acquisition of FirstMerit, which closed Aug. 15, allows it to pay more attention to the mid-Michigan market, a region previously underserved by the bank. In the merger, Huntington increased from 770 national branches to nearly 1,000 locations, and the process of converting FirstMerit branches to Huntington already has begun.

“We had a presence on the east side of the state and on the west side, and our merger with FirstMerit filled in the middle of the state,” Moraw said.

Additionally, the FirstMerit acquisition extends the Huntington footprint into Illinois and Wisconsin and would allow the bank to follow customers who might expand or move their business into those states.

“FirstMerit was an active SBA lender, though I can’t speak to exactly what their playbook was,” Moraw said. “But what we’re bringing to these markets is an even greater knowledge and comfort level in utilizing SBA lending.”

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