Arkansas National Bank, McIlroy Bank Leaders in SBA Loans

Guarantee from Small Business Administration helps start-up businesses overcome hurdles to borrowing money

McIlroy Bank & Trust Co. again leads the region’s lenders in making the most loans backed by the Small Business Administration.

But when it comes to amounts, Arkansas National Bank surpasses the rest, followed by Regions Bank and First National Bank & Trust of Rogers.

Fayetteville’s McIlroy Bank made eight SBA loans in 1999, compared with nine the previous year. But those loans totaled just $768,500.

Arkansas National Bank, based in Bentonville, made six SBA loans but they totaled nearly $2.6 million.

“ANB aggressively seeks to meet the credit needs of our area communities, and the SBA is an important part of our efforts to reach a large and diverse customer base,” said Sam Harris, senior vice president of commercial loans for the bank’s Bentonville office.

“SBA provides avenues for people who may not qualify for conventional credit to receive the financing they need for their small businesses through their local bank with an SBA guarantee,” Harris added.

SBA loans are typically made to customers who have most of the qualities needed for obtaining conventional credit —past good payment records, a good idea for a new business or expansion and capable management — but may lack a track record for cash flows and loan repayments.

Lenders, usually banks, get the SBA’s guarantee that the loan will be repaid. It’s often an ideal way for start-up businesses to obtain capital.

Harris said it’s an “excellent product.”

“It’s a good tool for banks to provide additional capital where otherwise they may view the risk to be [too high],” he said. “Banks are somewhat conservative in nature [and] the SBA provides that valuable guarantee.”

It’s still early in the year, especially for making predictions, but Harris said the outlook is bright for SBA lending in 2000.

“I think we’re going to do well this year. I have several projects in the works right now,” he said. “We certainly have an excellent start.”

Harris said he’s already had three applications approved for SBA-backed loans, two of which have already closed. On a pro-rata basis, Arkansas National is ahead of last year’s numbers, he said.

Regions Bank, which comes in fourth in number of loans made, was second in dollar amount loaned at nearly $1.7 million while First National Bank of Rogers ranked third in number of loans (five) and in amount loaned ($1.5 million).

Statewide, Bank of America leads the pack of lenders with 25 SBA loans totaling $3.1 million.

Arkansas Capital Corp. loaned the most money ($6 million) and made 20 loans.

In 1998, El Dorado-based First Financial Bank led the state with 33 loans totaling $9.4 million.

First Financial’s Springdale branch ranked fourth in Northwest Arkansas for number of loans (four).

Asked whether the entrepreneurial spirit that seems to be pervasive in Northwest Arkansas affected the amount of money his bank loaned with the SBA guarantee, Harris saids yes.

“I think it’s the spirit of what the SBA was designed to do. When you look in the dictionary under ‘SBA,’ it should say ‘an entrepreneur with a good idea … looking to realize that entrepreneurial dream,” he said. “I just so happens Northwest Arkansas seems to be rich in entrepreneurs these days.”

Harris added, “We seem to have quite a few businesses popping up in Northwest Arkansas [and many of them are] funded by SBA loans.

Interest rates are rising, though, and that means even loans backed by the SBA will be more expensive for borrowers.

“I think rates will go up, but, if you notice, conventional rates are going up, too,” Harris said.