Nation, state see growth in SBA loans

Since the federal stimulus package was signed nearly eight months ago, there has been a significant increase in Small Business Administration loan activity.

And Kansas has been in step with that upswing.

From March through Sept. 28, federal figures show the dollar volume in the state for the two largest SBA-backed loan programs have increased 64 percent compared with January and February.

The nearly eight-month stretch saw the loans average $2.52 million each week, up from the $1.53 million weekly average for January and February.

A total of $12 million in loans for all SBA programs were made in September in the Wichita district, which covers 77 counties.

Wayne Bell, director of the Wichita district, said a good month for his office is $5 million.

"From our perspective, things are looking better," Bell said Monday.

Scott Soderstrom, the small-business lending officer at Intrust Bank, agreed.

"It has picked up," he said, "but it's still not the pace it was last year.

" (The stimulus package) helped slow the bleeding from an open gash."

Soderstrom said he is also seeing an increase in higher net-worth of those applying for SBA loans.

For the two large programs, the SBA reported its weekly average since the stimulus package was signed was $275 million through Sept. 25. That's a 67 percent increase over the $165 million average for the seven weeks prior to package being signed Feb. 17.

The dollar volume for September was $1.9 billion for the SBA's highest single-month total since August 2007, the agency said.

The two SBA loan programs reflected in the figures are the 7a and 504. The 504 loans can be used only to help finance fixed assets, such as equipment and buildings. The 7a loans can be used for fixed assets, but they also can be used for working capital, to pay off debt and to buy inventory.

The stimulus package gave those two programs a boost by eliminating borrowers' fees and increasing the SBA's maximum guarantee on a loan from to 90 percent from 75 to 80 percent.

In addition, the catch-up loan program the SBA started June 15 has increased its pace after a slow start. The America's Recovery Capital — or ARC — loans are a product of the stimulus package.

The Wichita district saw 31 ARC loans made through Sept. 30 and totaled just over $1 million. Only four were made in the district in the first six weeks of the program.

Nationally, there have been 2,715 ARC loans made through Sept. 29. Two-thirds, or 1,828, of those have been made since late July.

Lenders have been reluctant to make ARC loans because of the amount of paperwork involved and low return. The SBA pays the lenders only 2 percent above prime, adjusted monthly.

Borrowers pay no interest on the loans, which have a maximum amount of $35,000, and payments can be deferred for 12 months after final disbursement. ARC loans are also guaranteed 100 percent by the federal government.

While the paperwork hasn't been simplified, Wichita district spokeswoman Vanessa Klein said the SBA has provided lenders with additional guidance.

"And I think the lenders are getting more comfortable with the paperwork," she said.

Of the Wichita district's 31 ARC loans, 18 were made to businesses outside of Wichita and the remaining 13 were within the city limits, Klein said.

Through Sept. 28, the state had seen 49 ARC loans totaling just over $1.6 million.