SBA Lending in Arkansas Rises in 2013

by Luke Jones  on Monday, Nov. 4, 2013 12:00 am  

The most successful year during the last five for the SBA was 2011, where 330 loans were approved for a total of $155 million. Nelson said this was because, for that year, under the American Recovery & Reinvestment Act, guaranty fees were waived and loans could have a guaranty of up to 90 percent of their value.

“It also gave a higher percentage to lenders, so we saw quite a bit of activity at that time,” Nelson said. “The guaranty fee we charge on a maximum-sized loan, $5 million, is over $50,000, so that was quite a savings. Lenders got a 90 percent guaranty instead of 75 percent, so that lowered their risk.”

When the provisions under the Recovery Act ceased, the number of SBA loans dropped but have steadily risen since then.

The largest recipients of Arkansas SBA loans in fiscal 2013 were agricultural and timber companies, accounting for $36.4 million in loans. Of the loans granted in 2013, 15 were for more than $2 million, and 67 were for less than $150,000.

Going Local — or Not

The SBA loan program usually works through local banks. Going into 2014, 127 lenders in Arkansas allow SBA loans, Nelson said. That isn’t all of them, of course.

“What happens a lot of times is [businesses] call us and say, ‘I want to start my business,’ or ‘I need money to grow, but my bank isn’t interested,’ or ‘they don’t do SBA loans,’” Nelson said. “So we give them several alternatives.”

In some situations, businesses can simply turn to an out-of-town bank. For example, Joe Davis financed the 2013 startup of his business, Joe’s Pharmacy Express in Searcy, through an SBA loan delivered by First Financial Bank of El Dorado.

Through a contact, Davis discovered that First Financial frequently worked with SBA loans, so he tried the bank out, and he said that so far, “it’s been a roaring success.”

Incidentally, First Financial financed 61 SBA loans in fiscal 2013, more than any other Arkansas bank. Only Arvest Bank of Fayetteville, the state’s largest by assets, came close, with 45.

Nelson said business owners are often encouraged to visit the Arkansas Small Business & Technology Development Center at the University of Arkansas at Little Rock, where they can understand better how to make a business plan and can be walked through the SBA loan application process.

“We also have Arkansas Capital Corp.,” Nelson said. “They do both of the kinds of loans we have, the 7(a) and the 504.”

 

 

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