More Clark County small businesses are getting federally backed loans this year than a year ago. And banks and credit unions say they hope to lend even more to small businesses in the coming months.
Lenders have so far issued 87 U.S. Small Business Administration loans worth $18 million to Clark County businesses in 2010, compared with 63 loans worth $12 million in the first six months of 2009.
Nationally, SBA loan volume in the first half of the year increased 48 percent over the same period last year — a signal that credit is easing and that more companies are receiving loans to sustain and grow their businesses.
The economy has improved enough so that more businesses qualify for the loans, said Scott Beard, senior vice president of lending for Pacific Continental Bank in Portland and Vancouver. Sales have stabilized and companies have enough steady cash flow that owners and banks trust it will continue, he said.
“If a business got through 2009 … it lets us know the management skills are there to take them through tough times (and) that’s one of the key things we look at with SBA loans,” Beard said.
Increased loan volumes in recent months have also been due in part to an American Recovery and Reinvestment Act program that boosted the agency’s loan guarantees to 90 percent from 75 percent and waived application fees, local bankers say. The SBA supports bank and credit union lending to businesses that wouldn’t otherwise qualify for conventional commercial loans by promising to repay a portion of the loan if the business defaults. The increased guarantee made it even less risky for banks to loan to businesses.
That program ran out of money in May after several extensions, and the increased guarantees are now on hold pending another extension.
Pacific Continental ranked No. 4 among Clark County lenders with eight SBA loans worth $2.5 million issued in the first six months of 2010. The bank has increased its SBA lending three-fold since the same time last year due to the federal stimulus program, Beard said. But the bank plans to further increase its SBA lending this year whether or not Congress extends the SBA stimulus program, Beard said.
Columbia Credit Union, Clark County’s No. 1 SBA lender by volume so far this year, has seen a 15 percent boost in SBA lending in 2010, issuing 15 loans worth $1.3 million since January.
Companies with a good cash flow that may not have much collateral or cash on hand are the best prospects for SBA loans, said Alan Ludlow, vice president of commercial services at the credit union.
“If they’ve been through hard times and used up some of their equity, but have adequate cash flow, that’s a good place for an SBA loan to shore up that difference,” Ludlow said.
The credit union has been aggressively marketing its SBA loans at local business events, looking specifically for businesses that fit the lending profile, said Ludlow.
Other banks on the top 5 list include West Coast Bank at No. 2 with 12 loans worth $2.4 million; First Independent Bank at No. 3 with nine loans worth $844,000; and U.S. Bank at No. 5 with seven loans worth approximately $2 million.