Omaha, NE – The amount of small business loans across Nebraska financed through the SBA set a new record in Fiscal Year 2011, which ended Sept. 30.
The SBA approved 530 loans for $167.5 million in loan guarantees through more than 75 banks and credit unions across the state, shattering the previous standard of $153 million set last year, a jump of nearly 9.5 percent.
The average dollar amount per loan in Fiscal 2011 was $316,156, an increase of 20.05 percent from 2010.
This is all the more remarkable in light of a sluggish market for commercial loans for small businesses in the rest of the country.
“We saw this year that the biggest issue for small businesses in Nebraska continues to be access to credit, and it’s encouraging to see they’re continuing to take advantage of our loan programs in greater numbers,” said Leon Milobar, District Director of SBA’s Nebraska District Office.
“Even with the continuing challenges throughout the economy facing them, small businesses in this state are eager to seek opportunities, invest for the future, commit the cash to expand their operations and create and keep jobs in our state,” he added.
As a direct result of SBA-guaranteed small business financing throughout the state this fiscal year, nearly 2,000 new jobs are being created in Nebraska, and 4,300 jobs are being kept on payrolls.
Lender relations specialists from the Omaha-based office fanned out throughout the state this year, making almost 500 face-to-face visits to commercial lenders to increase access and raise awareness of SBA-backed loan programs. The push for more SBA loans is backed by evidence that up-and-coming entrepreneurs drive the economic recovery and fear that small towns in Nebraska will suffer without jobs, products and services provided by local businesses.
SBA-backed loans were made to small businesses in 53 counties in Nebraska; 59 percent of those loans went to existing businesses while 41 percent went to start-ups. Rural small businesses received 187 loans, while those in more urban parts of the state received 343.
Loan volume to women-owned small businesses rose from $21 million last year to $24 million this year.
While the number of individual loans fell in certain parts of the state this fiscal year compared to last, SBA financing to small businesses in Congressional District 1, centered in Lincoln, and including Norfolk, Fremont, Beatrice and Nebraska City, rose almost five percent over last year. Loan volume in the area also was up 6.8 percent, from $48 million to $51.4 million.
Loan volume in Congressional District 2, which covers Omaha and parts of Sarpy County, was up a remarkable 21.6 percent.
These overall gains across the state are notable in light of expiration in late December of certain provisions of the Jobs Act, which provided funding for higher loan guarantees for lenders and lower fees for borrowers on SBA-backed small business loans.
Omaha’s Centris Federal Credit Union, the SBA’s nationwide Rural/Community Lender of the Year for 2011, made 43 loans, more than any other lender in the state with $3 million in volume. The top volume lender, Wells Fargo, made 36 loans for $20.7 million for Nebraska’s small businesses, an increase of nearly $6 million over last year.
The SBA’s 504 loan program, designed for large equipment and real estate financing to generate economic growth, enjoyed another successful year, with 58 loans for $30.9 million going to Nebraska businesses; the latter figure jumped more than $7 million from last year.
The SBA works with a Certified Development Company (CDC), a private, nonprofit corporation to provide financing through this program to small businesses. Typically, a 504 project includes a loan secured from a private sector lender with a senior lien covering up to 50 percent of the project cost, with a loan secured from a CDC, backed by a 100 percent SBA-guaranteed bond offering covering up to 40 percent of the project cost. The SBA also offers this program as a means for many small firms to refinance existing debt into a lower interest rate.
As a result of 504 financing, 383 new jobs were created in Nebraska.
The record amount of SBA-backed financing in the state partly can be attributed to continued caution by lenders to make commercial loans, especially to new businesses. SBA loans remain attractive because the SBA guarantee provides lenders with some cushion for their risks, especially for small businesses with less collateral and smaller equity injections typically required for conventional commercial loans.
SBA-backed loans represent only a small fraction of small business lending nationwide, but these loans are closely monitored as an indicator of banks' willingness to lend to Main Street companies. A recent survey by the National Federation of Independent Business found that while many small businesses in the U.S. have been holding off on taking on more debt, those that do have turned to the SBA in greater numbers this year. Across the nation, the SBA has seen an increase in overall loan numbers and a jump of 44 percent in loan dollar volume.