Northwest SBA-backed Lending Down 3 Percent

Statewide, 81 financial institutions made 581 U.S. Small Business Administration-guaranteed loans worth almost $125 million to borrowers in Arkansas during fiscal 2005, which ended Sept. 30. The data comes from the SBA in Little Rock.

Those totals include 528 loans made under the “7(a)” program that provides general financing and working capital for small businesses and are provided by third-party lenders, and 53 under the “504” program that provides long-term financing for fixed assets.

The SBA doesn’t provide a breakdown of which loans were made at specific offices, or to what city or county the borrower resides in. So to be fair to all lenders inside and outside the state, the list available here is limited to lenders who had offices in the six-county area (Benton, Carroll, Crawford, Madison, Sebastian and Washington) during the SBA’s fiscal year 2005. All lenders who met that criteria and made at least one loan were included, even if the institution made no SBA-backed loans within the area.

Unfortunately, this method doesn’t paint an accurate picture of SBA lending in Northwest Arkansas. The totals on the list show that 23 lenders made 284 SBA-backed loans worth $60.6 million. That’s about 50 percent of the statewide total, which is too heavily weighted.

Some out-of-area companies are excluded from the list, while other companies appear to have loaned a great deal of money in the six-county region, when in fact their totals are for the entire state.

This is the case with Metropolitan National Bank of Little Rock, which topped the list with 69 loans, but whose SBA lending was focused almost exclusively in central Arkansas. MNB is included because it had offices open in Fayetteville during fiscal 2005.

Larry Olson, Washington County president for MNB, said the bank hired Jim Coffey, former information officer at the SBA, as its primary SBA contact. Coffey offices out of Little Rock, but will be making trips to Northwest Arkansas as needed, Olson said.

MNB plans to make SBA lending a high-priority segment of its business in Northwest Arkansas, Olson said, and a full-time northwest SBA contact for the bank is probable.

The totals on Page 31 represent a drop of 3 percent in total 7(a) loans and an 11 percent drop in the value of those loans in Northwest Arkansas. However, the statewide total number of loans was up 13 percent, and total value was up 13.6 percent.

As for 504 lending, there are only two institutions in the state that make 504 loans: Arkansas Capital Development Corp. of Little Rock and West Central Arkansas Planning in Hot Springs. WCAP had four loans worth $1.5 million for fiscal 2005. ACDC made 49 different 504 loans worth a total of $27.24 million in fiscal 2005. That number is up from 46 loans worth $19.77 million for fiscal 2004, a 38 percent increase in value.

Al Hodge, senior vice president of lending for ACDC, said 22 of the 504 loans came from Northwest Arkansas, or about 45 percent of all 504 activity. The increase in value of the loans means projects are getting bigger, Hodge said, and the value leap between 2004 and 2005 is the biggest yet for the company.

Cory Pratt, lending officer for the ACDC’s office in Fayetteville, said $10 million in 504 loans closed out of the office during calendar 2005 alone.