Phil Castle, The Business Times
A total of nearly $5.2 million worth of loans were issued in Mesa County during the last fiscal year under two federal programs designed to bolster small business access to financing.
Lending levels under the U.S. Small Business Administration 7(a) and 504 programs remain below prerecession levels. But as business conditions have slowly improved, demand for 7(a) loans has picked up, local lenders say.
“It was a pretty good year for us as far as SBA loans were concerned,” said Scott Wittman, vice president at Timberline Bank in Grand Junction.
Steve Irion, business banking manager and market president for Wells Fargo Bank in Grand Junction, agreed with that assessment. “The climate has improved a little bit,” Irion said.
But Pat Berry, a loan officer with the Small Business Finance Corp. in Grand Junction, said demand for 504 loans continues to decline even as the regional economy remains slow to “shake out of the recession.”
According to numbers from the Colorado District Office of the SBA for the 2014 fiscal year ending in September, 28 loans worth a total of almost $5.1 million were issued in Mesa County under the 7 (a) general business loan guarantee program. One more loan worth $123,000 was issued under the 504 program to finance land, buildings and equipment.
The SBA doesn’t make direct loans under the 7(a) and 504 programs. By guaranteeing repayment on a portion of the loans, however, the agency enables lenders to extend financing to small businesses that might not qualify under conventional terms.
“It continues to be a very important way for us to direct capital to small businesses,” Irion said.
By way of comparison, 56 loans worth a collective $13.7 million were issued in Mesa County under the 7(a) program for the 2007 fiscal year.
For the 2014 fiscal year, Timberline Bank was the largest SBA lender in Mesa County in issuing 12 loans through the 7(a) program worth a total of nearly $1.7 million. Vectra Bank issued two loans worth a total of $287,000, Wells Fargo issued five loans worth a total of $243,200 and U.S. Bank issued four loans worth a total of $107,000. Colorado Lending Source issued the lone 504 loan worth $123,000.
As an SBA preferred lender, Timberline Bank can make quick decisions on SBA-backed loans as well as quickly process the paperwork, Wittman said.
Wells Fargo employs SBA lending specialists, Irion said. “We make the process much smoother, much easier.”
Wittman and Irion both said local business conditions have improved, although not nearly to the extent of what they described as the unsustainable boom that preceded the bust. “There’s nothing wrong with a slower level of growth,” Irion added.
While challenges persist, a number of indicators point to continued improvement, Irion said, including the increased consumer confidence that drives increased sales.
Berry said demand for 504 loans continued to “bounce along the bottom” in large part because of the slow economic recovery in Western Colorado that’s kept small business owners hesitant to make such big purchases as land and buildings. At the same time, low interest rates have made 7(a) loans an attractive alternative.
Berry said she expects demand for 504 loans to increase, though. “I’m getting more optimistic about the future.”
The 504 program continues to offer the longer, fixed-rate terms and lower down payments that help preserve cash for operations, she said.
Statewide, a total of 1,441 7(a) and 504 loans worth a collective $654.3 million were issued in the 2014 fiscal year, surpassing the record dollar volume of a year ago by $32 million. Wells Fargo remained the leading 7(a) lender with 248 loans worth a total of more than $77.2 million. U.S. Bank issued 249 loans with a combined dollar volume of nearly $38.2 million.
Lending through the 7(a) program also reached new heights nationally for FY 2014 with the approval of 52,044 loans worth a total of nearly $19.2 billion. Those numbers represented a 12 percent increase in the number of loans and 7.4 percent increase in dollar volume over the previous year.