SBA-backed lending surges in Mesa County

Soctt Wittman
Soctt Wittman

Phil Castle, The Business Times

A total of nearly $18.3 million worth of loans were issued in Mesa County during the last fiscal year under two federal programs backing small business lending.

The latest total is more than triple the combined dollar volume of lending the previous fiscal year under the U.S. Small Business Administration 7(a) and 504 loan guarantee programs and higher than pre-recession levels.

Increased demand for SBA-backed lending reflects in part improving business conditions, said Scott Wittman, vice president at Timberline Bank in Grand Junction. “I think the economy is moving in the right direction.”

According to the Colorado District Office of the SBA, for the 2015 fiscal year ending in September, 31 loans worth a collective $15.6 million were approved in Mesa County under the 7(a) general business loan guarantee program. Another four loans worth a total of 2.6 million were approved through the 504 program to finance land, buildings and equipment.

The SBA doesn’t make direct loans through the programs. By guaranteeing repayment on a portion of the loans, however, the agency enables lenders to extend financing to businesses that might not otherwise quality under conventional terms.

Wittman said the programs offer improved access to financing to small businesses while lowering the capital banks are required to maintain for lending because of the repayment guarantee. “It’s kind of a win-win.”

The dollar volume of SBA-backed lending surged in Mesa County for the 2015 fiscal year. By comparison, 29 loans worth a total of $5.2 million were approved through the 7(a) and 504 programs during the 2014 fiscal year. The latest total is the highest since the 2007 fiscal year, when nearly $14 million in loans were approved through the 7(a) program alone.

For the 2015 fiscal year, Timberline Bank remained the top SBA lender in Mesa County with 11 loans worth a total of nearly $8.2 million approved through the 7(a) program. That accounted for the bulk of the 18 loans worth a combined $9.2 million the bank issued statewide.

While Wells Fargo remained the top SBA 7(a) lender statewide, the bank ranked second in Mesa County with nine loans worth a total of more than $2 million. U.S. Bank issued five loans worth $132,000, while Vectra Bank Colorado issued two loans worth a combined $630,000.

Colorado Lending Source, the top SBA 504 lender statewide,  was also the top 504 lender in Mesa County with three loans worth a collective $1.6 million. The Denver Urban Economic Development Co. Issued one loan for $930,000.

As an SBA preferred lender, Timberline Bank can make quick decisions on SBA-backed loans as well as quickly process the paperwork, Wittman said.

With the SBA guarantee, the programs enable the bank to extend financing to businesses that might not offer enough collateral to qualify under conventional terms, Wittman said. The SBA programs also offer lower down payments and longer fixed rates for interest.

Statewide, 1,754 loans worth a combined $701 million were approved through 7(a) and 504 programs, record levels for both the number and dollar volume of loans. The 2015 fiscal year was the third straight for record lending levels.

Ed Cadena, director of the Colorado District Office of the SBA, attributed the latest increase to a robust economic recovery driven by growth in the aerospace and technology sectors as well as the population. “Colorado right now is a miracle,” he said.

If trends continue, the dollar volume of SBA lending could reach $1 billion for the 2016 fiscal year, Cadena said.

SBA lending also climbed to record levels nationally with a total of nearly 69,000 loans worth a combined $27.9 billion approved through the 7(a) and 504 programs.