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North Bay Business Journal

Monday, April 25, 2011, 8:40 am

North Bay SBA lending up 21 percent

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    SBA official: ‘Across California we had a huge increase in lending’

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    NORTH BAY — North Bay SBA lending — both 504 and 7a — increased by 35 percent in dollars and 21 percent in volume year-over-year for the first half of fiscal 2011 that began in October.

    A total of $47,822,600 was lent to North Bay businesses in those first six months, according to the SBA.

    The maximum loan allowance was increased from $2 million to $5 million last year for both the 504 and 7a SBA programs last year with the Jobs Act.

    “Across California we had a huge increase in lending,” said Mark Quinn, district director of the SBA in San Francisco. “In dollars it has gone up significantly. There are bigger loans being made because SBA is allowing larger loans.”

    He said that while in California as a whole it made a big difference, in the North Bay it didn’t turn out to be as significant. Only one loan made was over $2 million.

    Small businesses in the greater Bay Area received 15 percent more in SBA-504 financing the first two quarters the fiscal year compared to the same period a year ago, according to CDC Small Business Finance.

    The loans were made to 164 small businesses that currently employ or plan to employ a total of 5,656 workers.

    SBA-504 loans are used to finance commercial real estate purchases and large equipment.

    “Commercial property values have bottomed out and small businesses are seizing the opportunity to purchase real estate using low-interest SBA financing,” said Mark Stebbins, senior loan officer at CDC Small Business Finance, the nation’s largest SBA-504 lender.

    Mr. Stebbins said he expects additional interest in SBA-504 financing when more small businesses discover the SBA’s new refinancing program.

    This year, for the first time, the U.S. Small Business Administration has allowed for the temporary extension of the 504 loan program to allow refinancing of existing commercial real estate debt.

    The administration approved the SBA 504 Debt Refinance Program outlined in the Small Business Jobs Act of 2010.  Market research showed that a large percentage of commercial mortgages outstanding are set to mature within the next few years, particularly those held by community banks. As real estate values have declined, however, even small businesses that are performing well and making their payments on time can have difficulty refinancing these loans and may need to restructure their debt.

    “There is no doubt there is need for this program,” said Barbara Morrison, chief executive officer of TMC Development, a certified SBA development company.

    Under the Jobs Act, the SBA implemented the temporary program through Sept. 27, 2012, which allows small businesses to refinance eligible fixed assets in its 504 program without requirement of an expansion, as is the case with typical 504 loans. The SBA intends this program to provide small businesses the opportunity to lock in long-term, stable financing, as well as protect jobs.

    “We haven’t seen as much refinancing coming through as we thought,” Mr. Quinn said. “Some of that is we had put some limits on the date of the loan that would be coming due so we wouldn’t use up all the funds. But since that wasn’t a problem we changed it so any loan can be refinanced with the 504.”

    Bank of America led all banks in SBA-504 financing in the Bay Area in the first two quarters of 2011, partnering with certified development companies on 20 loans and providing $50.3 million in capital.

    Locally, Redwood Credit Union financed more SBA-504 loans than any other institution in both number of loans and dollar amount.

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