Incentives Boosted SBA Loan Value During Fiscal Year 2009

If there’s been one bright spot in lending during the past year, it’s been in U.S. Small Business Administration loans.

Several lenders said SBA loan enhancements that were part of the American Recovery and Reinvestment Act of 2009, which essentially eliminated fees to borrowers and increased the guaranty on 7(a) loans from 75 to 90 percent, were a boon. The enhancements ended February 28.

The SBA deals with two types of loans: 504 loans that are long-term fixed-rate financing mechanisms for major fixed assets such as land and buildings, and 7(a) loans provided by third-party lenders with an SBA guaranty on portions of the loan.

Lenders and the U.S. Small Business Administration made 263 unique 7(a) loans in Arkansas during its fiscal 2009, which ended Sept. 30. The volume was down from 303 statewide loans made in fiscal 2008.

The total value for 2009 was $82.93 million, up from $72.73 million in 2008.

The Business Journal annually ranks lenders with offices in the six-county area by their statewide totals. Lenders that made at least one loan were included (see p. 13). Those 17 lenders made 188 total 7(a) valued at $62.73 million. That compares to 2008’s 17 lenders with 156 loans worth $30.08 million.

First Financial Bank of El Dorado made more 7(a) loans than any other lender in the state, 47 valued at $19.8 million, or about 23 percent of the state’s total value for the year. The bank’s primary SBA lending is related to the agriculture business. FFB’s Fayetteville office makes loans in Arkansas, Oklahoma and Missouri.

Arvest Bank made more 7(a) than any other Northwest Arkansas-based lender, 44 valued at $12.09 million, or about 16.7 percent of the total loans made in the state and 14.5 percent of the state’s total value.

Arkansas Capital Corp. of Little Rock made the largest value of loans within the Northwest Arkansas subgroup, with 33 loans valued at $18.29 million.

Payne Brewer, executive vice president and loan manager for Arvest Bank-Fayetteville, said the enhancements certainly helped his bank’s SBA numbers.

“What I’m hoping is that it’s opened people’s eyes again to the benefits of the SBA,” he said.

For the first half of 2009, Arvest had processed $2.9 million in SBA loans, but for the second half of the year, closed $11.9 million in SBA loans. That includes markets in Oklahoma, Kansas and Missouri.

Sam Harris, regional president for Benefit Bank of Fort Smith, which has a loan production office in Springdale, said that as of March 2, Benefit has “several million dollars in SBA loans in the pipeline.”

The thrift hasn’t historically pursued SBA business but is actively seeking it now. The mix is split about 50-50 between start-up businesses and existing small businesses seeking to restructure or expand, Harris said.

Ryan Lilly, vice president of commercial loans for Delta Trust & Bank’s Fayetteville office, said SBA lending has really picked up for his bank.

Arvest’s Brewer said the bank has $13 million in SBA loans that were eligible for the enhancements, but had not yet closed. About 50 percent of that total is in Arkansas, he said. He expects most of them will close by summer.