TALK | business
SBA Loans Level Out After Jobs Act by Jacob D. Fuller
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November 14 - 20, 2012
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be greatly depressed.” Stewart said businesses must meet several SBA requirements to get a loan. First, SBA directs businesses, especially start-ups, to local organizations that provide free help in finalizing business and marketing plans and legal papers. Those requirements help lower the risk for SBA on the loans. “Overall, historically, and it that still holds true, we have very, very, very few loan defaults,” Stewart said. Stewart said the program picked up nine new lenders during the year, signaling positive growth in the loan industry. “This is extremely significant for small businesses in our state,” Stewart stated in a release. “These loans enabled Mississippi small business owners to obtain financing to help them create or retain an estimated 3,755 jobs. Overall, the pace of SBA loan-making is a healthy sign for the economy and the credit markets, and is one of the foundations for ensuring the availability of financing to small businesses trying to establish themselves, grow, and create new jobs.” The top five Mississippi-based SBA lenders in terms of volume for the year were Community Bank of Mississippi, First Financial Bank, Trustmark National Bank, Covington County Bank and Peoples Bank. The top five lenders in terms of dollars for the year were Community Bank, BizCapital BIDCO II, LLC, First Financial Bank, Trustmark National Bank and M&F Bank. Rankin led all counties with $11.01 million in loans. Banks loaned out just over $9 million in Madison, and SBA loans in Hinds totaled $7.54 million. Covington led the counties in total number of loans at 59. Comment at www.jfp.ms. Email Jacob D. Fuller at jacob@jacksonfreepress.com. TRIP BURNS
fter many of the Small Business of any lender in the state. Jobs Act of 2010’s incentives Ralph Hall, vice president for the SBA expired in 2011, during fiscal department at Community Bank, said that year 2012, the U.S. Small Busi- business owners’ discomfort also played a ness Administration’s Loan Programs set- role in the decreased loan totals in 2012. tled to its lowest lending total since 2008 “Many small businesses delayed makin Mississippi. ing decisions to increase investments in their Small businesses in the state received businesses due to uncertainty of the econo442 SBA loans totaling $132.4 million. That’s the fewest number of loans in Mississippi since 2000, down from 749 in 2011 and 1,138 in 2010. The total amount was the least in the state under the Barack Obama administration and the fourth lowest total since 2002. Janita Stewart, U.S. Small Business Administration Mississippi District director, said the spike in lending over the last two years was due to the temporary incentives the Small Business Jobs Act of 2010 gave Community Bank was one of the state’s top lenders of lenders. Among those incenSmall Business Administration-backed loans in 2012. tives was a $30 billion national fund that provided community banks with lending capital at rates as low as my and impending regulations at the time,” 1 percent in 2010—but only if the banks Hall told the Jackson Free Press. went above the 2009 small-business lending With its 75-percent rate and higher levels. SBA also temporarily offered higher loan guarantee, SBA takes on most of the guarantee rates to lenders. risks in SBA-backed loans. Because they can “As a result of (the act), we had loans pass off the risk, SBA lending is attractive to that were made at the 90-percent guarantee community banks. rate during (2010 and 2011), whereas we Hall said without SBA’s backing, lenddid not have that during fiscal 2012,” Stew- ers would never make most of those loans. art told the Jackson Free Press. In 2012, “These SBA Loans are at a slightly SBA’s maximum guarantee fell to 85 percent higher risk due to the lack of collateral. for loans up to $150,000. SBA can guaran- The SBA guaranty mitigates the risks to the tee 75 percent of loans above $150,000, up bank and allows us to approve loans that to the new $5 million maximum for loan, we might not otherwise be able to make,” which the Small Business Jobs Act perma- Hall said. “Many deserving small businesses nently raised from $2 million. would not receive necessary financing for Community Bank of Mississippi buildings, equipment, furnishings, invenloaned $63.8 million to 145 businesses in tory and working capital, if not for the bank the state last year. That was the highest total participating in the various SBA lending loaned and second highest number of loans programs. Economic development would