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Demand for Small Business Capital in Nebraska Outpaces Regional, National Trends, Volume Up 26 Percent

Release Date: 
Thursday, April 10, 2014
Release Number: 
Advisory Date: 
Friday, May 9, 2014
Advisory Number: 
Michael Foutch

Loans less than $150,000 in State See 10 Percent Jump

Omaha, NE – Small businesses across Nebraska took advantage of no up-front fees for SBA guaranteed loans in encouraging numbers, bucking broader regional and national trends during the first half of Fiscal 2014, ending March 31.

Beginning Oct. 1, SBA waived up-front guaranty fees paid by small businesses on loans of $150,000 or less, a move which has saved nearly $9 million nationally in fees. Moreover, SBA has suspended on-going servicing fees lenders normally would pay to entice them to work with small loan projects.

As a result of expanded support by lenders across the state taking advantage of this policy change, according to Mike Niehaus, lead lender relations specialist in the SBA Nebraska District Office, small business loans of $150,000 or less have jumped 10 percent in the Cornhusker State compared to the same time in Fiscal 2013.

Eliminating these up-front fees likely increased demand from small business owners for SBA-guaranteed financing for start-up and expansion projects in Nebraska, according to SBA Nebraska District Director Leon Milobar.  Since the policy change Oct. 1, and through the second quarter, the SBA has approved 103 loans in the state for $150,000 or less. Nationwide, the agency has approved some 12,170 loans of $150,000 or less for small businesses under the no up-front fee program, for a total of nearly half a billion dollars in financing.

Overall, in the past six months, the SBA, working with our commercial lender partners across the state, approved 191 loans, a 2.6 percent increase from this time last year. The dollar volume of those loans, $77.4 million, shot up 26.4 percent.  Nebraska small business lending outpaced regional and nationwide numbers: within the four-state region (Nebraska, Missouri, Kansas and Iowa), SBA loans are down 11.5 percent and volume is off 14.3 percent, while nationally, dollar volume for SBA loans is down 6.2 percent.

As a direct result of SBA-guaranteed small business financing throughout the state since Oct. 1, nearly 900 new jobs are being created in Nebraska, and 1,600 jobs are being kept on payrolls, both figures also ahead of this time last year.

“Speaking to small business owners, the number one concern I hear continues to be access to capital.  It’s encouraging to see they are continuing to take advantage of our loan programs in steady numbers,” Milobar said.  “The fact is, when small businesses can get the financing they need, they create and keep jobs in our state.”

In a continuing strong sign of confidence in Nebraska’s entrepreneurial economy, 41 percent of all SBA loan approvals in the first quarter went to fund new businesses, which created nearly 500 new jobs in the state as a result. Also, to date in Fiscal 2014, 41 percent of SBA approved loans went to firms categorized as owned 50 percent or more by women.

The SBA, working with banks and credit unions across the state over the past six months, approved guarantees for $17 million for small businesses in the accommodation and food services industry, with $14.5 million in financing approved for manufacturing firms.  Small businesses in the health care and social assistance industry rounded out the top three with $13.2 million.

According to the SBA’s Office of Advocacy, slightly more than half of all jobs in Nebraska are from companies with fewer than 100 employees.

SBA-backed loans represent a fraction of small business lending nationwide.   However, these loans are closely monitored as an indicator of bank’s willingness to lend to Main Street companies. 

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