SBA loans up in 2010
Banks and other lenders in the metropolitan New York area have stepped up their federally backed loans to small businesses this year.
That boost to the credit market for business owners has slowed, however, since added federal stimulus incentives for borrowers and lenders expired two months ago, according to a U.S. Small Business Administration official.
A recent report from the New York district office of the SBA shows lenders participating in the SBA 7(a) loan program approved more than 1,200 loans totaling approximately $298.6 million through the first three quarters of the 2010 federal fiscal year that began Oct. 1. The reporting period ended June 30.
The nine-month lending activity exceeds levels in the New York district for all of fiscal year 2009 by approximately $57.8 million and 118 loans.
Participating lenders this year also have approved approximately a total of $92.2 million to 132 small businesses through the SBA 504 mortgage loan program. That mortgage lending is on pace to exceed 2009 levels, when area lenders approved 165 loans in the 504 program totaling approximately $117.6 million.
Alfred J. Titone, deputy district director at the SBA office in New York, said quarterly lending this year in the 7a program, the federal agency”™s largest lending program, has been up about 80 percent from the same periods in the 2009 year.
SBA officials believe a large part of the increased activity is due to provisions in the American Recovery and Reinvestment Act that reduced or waived fees for borrowers under the 7a program and borrowers and lenders under the 504 program and raised federal guarantee rates on defaulted loans. The SBA this year has issued guarantees of up to 90 percent of loans, up from 75 percent or 85 percent, depending on loan amount and type, Titone said.
But those federal stimulus benefits ended as of June 1, he said. “Since those benefits sunsetted, we have seen a downturn in the number of loans being processed, and so are working hard with Congress to try to get them extended” through the 2010 calendar year, he said.
Several community banks in Westchester County do not appear on the SBA list of 7(a) lenders. “With a lot of the community banks, they didn”™t really jump too much on the benefits” from the federal stimulus package,” Titone said, “because most of them are in pretty good shape. Most of them did step up to the plate when the big guys stopped lending” early in the recession, he said.
At Community Mutual Savings Bank”™s corporate headquarters in White Plains, CEO John E. Ritacco said his bank this year did two or three SBA 504 loans, which are secured by real estate, but did not participate in the larger 7(a) lending program. “We don”™t see a lot of volume for that,” he said.
The demand for loans from small businesses is not there, Ritacco said. “The average small-business person is right now so confused with health care, tax law, the uncertainty of what the government is going to do next,” he said. “I just don”™t see small businesses expanding, borrowing, wanting to grow, with all the uncertainty.”