While few were left unscathed by the effects of the financial crisis, it could be argued that entrepreneurs ”“ perpetuators of the “American Dream” ”“ took the biggest hit.
However, with Small Business Administration lending programs posting record numbers over the past year, business owners like Daniel Magnus have begun to stage a comeback.
Magnus, a lifelong Westchester resident and former newspaper executive, was looking to change careers when he stumbled upon Elevation Burger, a relatively new franchise specializing in completely organic offerings.
Late last fall Magnus opened Westchester”™s first Elevation Burger restaurant in Rye Brook and just last week marked the beginning of construction on a second restaurant in Westchester”™s Ridge Hill shopping center in Yonkers ”“ a feat he says could not have been accomplished without SBA support.
“I would not have been in a position to open two (locations) off the bat,” said Magnus, who has exclusive rights to Elevation Burger franchises in Westchester and Fairfield County, Conn.
Between October 2010 and September 2011, the U.S. Small Business Administration backed more than $30 billion in loans nationally and $789 million in the southern district of New York, which includes the Hudson Valley, New York City and Long Island.
Of that, 185 loans worth more than $57 million were approved in Westchester County.
While those numbers are unlikely to repeat themselves, there has been a continued strong demand for SBA-backed loans by businesses across Westchester and across the state three months into the organization”™s 2012 fiscal year.
“I”™m very ecstatic about the success that we had last year,” said Pravina Raghavan, district director of the southern New York SBA office. “It”™s expected that (this year) your first quarter will be lower than your first quarter of last year, but I expect to have another good year.”
At Elevation Burger, Magnus said he anticipates employing 65 people between the two locations once the Ridge Hill restaurant is open for business.
Magnus added that he plans to open two new restaurants each year through 2013.
“I”™ve been absolutely overwhelmed by the response from the communities,” he said.
Through the first quarter of the SBA”™s 2012 fiscal calendar, which runs from Oct. 1 to Sept. 30, the southern New York office has backed 440 loans worth nearly $176 million compared with 763 loans for $387 million the previous year.
Raghavan attributed the sharp decline to temporary measures effective from September to December 2010 that waived fees associated with SBA loan applications and increased the portion of loans backed by the SBA to 90 percent.
“I know that people attribute a lot of our success to the incentives we had, which were the 90-percent guarantee and no fees, but what excited me was you could still see an uptick” later in the year when the measures had expired, she said.
Currently, the SBA guarantees 80 percent of sponsored loans that are for less than $150,000 and 75 percent of sponsored loans that are for more than $150,000.
The SBA”™s two signature loan programs are its 7a Loan Guaranty Program and its Certified Development Company/504 Loan Program that targets businesses looking to construct, buy or renovate fixed assets, such as land, buildings and machinery and equipment.
This year the SBA also simplified its CAPLines program, which is designed to help businesses meet short-term working capital needs ”“ a program Raghavan said was previously “underutilized.”
Robert Polito, director of government-guaranteed lending for Webster Bank in Waterbury, Conn., said three areas that will drive SBA lending in 2012 include the organization”™s budget flexibility, banks”™ response to the October 2010 measure that increased the maximum SBA-backed loan value from $2 million to $5 million, and banks”™ and businesses”™ response to the simplification of the CAPLines program.
Access to working capital lines is particularly significant for local businesses, Polito said, predicting that SBA-backed loans under its CAPLines program would “significantly increase in volume for fiscal year 2012.”
“In prior years the product was not even remotely used by SBA lenders because of the complexities,” he said. “What the SBA did was to drastically decrease the hoops you have to jump through to get one approved.”
Webster Bank divides its clients into a small-business portfolio and a commercial banking portfolio. Among the small-business portfolio, SBA-backed loans represented roughly 14 percent of the total loans approved by the bank last year, Polito said.
“We would like that number to grow significantly for 2012. It would be wonderful to reach that 25 percent level for the portfolio,” he said.
