- people on the move
Business loan activity picking up
Evidence that some small businesses are tunneling through their financial problems is demonstrated of late by what they intend to accomplish with the Small Business Administration guaranteed loans they receive, said Brad Dyksterhouse, senior vice president of business resource lending for The Bank of Holland, an approved SBA lender.
During the course of the Great Recession, the majority of loans — up to 75 percent — were requested to pay down existing debt, said Dyksterhouse. Within the last year, that trend has flipped; now, about three-quarters of SBA loans are designated for purchasing new equipment or to acquire a competitor or a building for expansion.
“It appears our clients don’t really feel things have turned a corner but are at least happy that they can see around the corner, and that gives them enough confidence to make the expansions they might have been delaying in the past when the economy was more questionable,” said Dyksterhouse.
That assessment bodes well with Kelly Russell, owner and manager of four Milestones Child Development Centers in Cascade, Belmont, Hastings and Caledonia, her newest location that just opened.
Russell said she was unable to get any lending traction when she applied for loans to expand her early childhood business in 2007 and again in 2009.
“We had planned on building a center during that time and we proposed (plans) to many banks,” said Russell. “We even had land as collateral, but the banks responded they’re not loaning money to anybody even with large collateral. So we took a break from expanding the business.”
Somewhat better economic conditions have birthed new business opportunities for Russell’s child care business.
She recently received from The Bank of Holland five SBA loans totaling a collective $4 million for new construction and equipment purchases and working capital.
“I feel more confident as a business owner that the local banks are starting to do a slow turnaround and show confidence in local business owners, and local business owners feel more confident in expanding their businesses,” said Russell.
SBA lending through The Bank of Holland has been robust in recent fiscal years, making 80 SBA loans last year.
In fiscal 2010, SBA loans for the West Michigan region totaled $6.7 million. In fiscal 2011, loan approvals rocketed to $29.2 million — a 333 percent jump, earning The Bank of Holland the distinction of becoming the No. 1 Michigan-based lender for SBA loan approvals. The Bank of Holland also is the only USDA Rural Development Certified Lender in Michigan for rural business loans.
Such lending activity is a signal to Dyksterhouse that consumer confidence is beating stronger, and businesses are feeding off that and seeking financing for growth and expansion.
“Not every small business was hammered to a devastating extent,” said Dyksterhouse. “There were a lot of businesses that were just being cautious, waiting out the storm before they jumped back into the game and made decisions on the expansions they want.
“Unless something happens to the economy and we get back into a worse (economic) state again, our borrowers appear to be making the commitment back to expansion versus a more cautious approach they had been taking,” said Dyksterhouse.
“I think a lot of businesses are seeing the opportunities now versus just seeing the challenges. There’s a lot of pent-up demand. People weren’t purchasing; people are now. When the consumer is purchasing, that allows businesses to feel comfortable making these expansions and take advantage of opportunities to acquire a competitor or acquire a building that might be vacant at prices that are more competitive than in the past.”