SBA-backed lending levels mixed bag in Mesa County

Phil Castle, The Business Times

While the number of loans issued in Mesa County under two federally backed small business programs held steady during the last fiscal year, the collective dollar volume of those loans dropped by more than half.

According to the Colorado District Office of the U.S. Small Business Administration, a total of 35 loans worth a combined $8.1 million were issued in Mesa County during the 2016 fiscal year under the SBA 7(a) and 504 guarantee programs.

Compared to FY 2015, the number of loans remained unchanged. But the dollar volume of SBA-backed lending dropped more than $10 million. The latest numbers still top FY 2014, however, when 29 loans worth a total of  $5.2 million were approved.

Across Colorado, SBA-backed lending climbed to record levels for a sixth consecutive year with 1,196 loans worth total of almost $827 million.

Ed Cadena, director of the SBA Colorado District Office, said the latest numbers reflect  both the continued growth of some areas of the state and slow recovery in other areas. Cadena said he’s optimistic, though, fortunes soon will change in Western Colorado and Mesa County. “I’m very bullish on Grand Junction.”

The SBA doesn’t make direct loans through the 7(a) general business loan guarantee program or 504 program to finance land, buildings and equipment. By guaranteeing repayment on a portion of the loans, however, the agency enables lenders to extend financing to businesses that might not otherwise qualify under conventional terms. Cadena said the programs offer banks a tool to mitigate risk, which in turn enhances prospective loans.

In Mesa County, Wells Fargo issued the most loans under the 7(a) program — 16 worth a total of $736,000. U.S. Bank issued six loans worth a combined $222,000. Bank of the West issued four loans worth a total of $902,000. Timberline Bank issued three loans worth $665,000. Grand Valley National Bank issued two loans worth $300,000. First Western SBLC issued only one loan in Mesa County, but it was the single largest for the 2016 fiscal year at more than $1.7 million.

Wells Fargo remained the top 7(a) lender statewide in issuing 564 loans worth a combined $114.7 million. U.S. Bank issued 217 loans worth a total of nearly $44 million across Colorado. Bank of the West issued 51 loans worth a collective $34 million.

John Hostetter, business banking manager for Wells Fargo in Western Colorado, attributed the decline in the dollar volume of SBA-backed lending in Mesa County during the 2016 fiscal year in part to the effects of a slowdown in regional energy exploration and production.

SBA-backed loans often are used to finance acquisitions of businesses or real estate and fewer of those transactions took place, Hostetter said.

At the same time, though, Hostetter said he expects SBA-backed lending activity to increase substantially for Wells Fargo in Mesa County during the 2017 fiscal year with dollar volume climbing to perhaps $5 million or more.

He said “major” SBA financing is being considered for several businesses that will have important effects on the community. “We’re very excited about what this will do for them.”

Timberline Bank, an independent bank headquartered in Grand Junction, also ranked among the  top 7(a) lenders statewide in issuing 15 loans worth a total of more than $5.6 million.

As an SBA preferred lending, Timberline Bank can make quick decisions on SBA-backed loans as well as rapidly process the paperwork, said Scott Wittman, vice president.

Wittman said SBA-backed lending levels can be cyclical, but Timberline Bank has been busy and he doesn’t expect that situation to change. “We’re cautiously optimistic that it’s going to continue to be so.”

As for the SBA 504 loan program, the Denver Urban Economic Development Corp. was the top lender in Mesa County during the 2016 fiscal year with one loan worth more than $1.7 million. Community Economic Development Corp. issued one loan worth $364,000. Colorado Lending Source issued one loan worth $337,000.

Colorado Lending Source remained the top 504 lender statewide with 123 loans worth a combined $105 million.

Statewide, 1,814 loans valued at a total of $682 million were issued through the 7(a) program, while 182 loans worth a combined $145 million were issued through the 504 program.

The total for SBA-backed lending fell short of the $1 billion milestone Cadena said he hoped for, but still constitutes a record for a sixth straight year.

Cadena said what’s even more important are the effects of the programs and how many small businesses receive help. Given that small businesses employ most of the people in Colorado, the benefits become significant, he said. “If the small businesses are doing good, everybody is doing good.”

Along the Front Range of Colorado, most small businesses are doing good given the growth in the economy and population, Cadena said.

What Cadena described as the “other Colorado” that doesn’t include the Front Range hasn’t fared as well. In those areas, it’s crucial for the SBA to reach out to help small businesses whether it’s through lending programs, assistance in starting and running operations or help in obtaining  government contracts, he said.

Cadena said he remains optimistic about Western Colorado and Grand Junction in offering a more affordable and less crowded place to work and live as well as a scenic setting with ample outdoor recreational opportunities.

“The things that make Colorado beautiful are still in Grand Junction,” he said.