Southwest Washington sees decline in SBA loans

Program aimed at small businesses felt effects from federal government shutdown

By Gordon Oliver, Columbian business editor

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The U.S. Small Business Administration's loan program took a hit when the federal government closed its doors Oct. 1-16 due to a political impasse in Congress, but business loans are moving again at a healthy pace locally as the federal fiscal year hits its midway point.

That's the word from the SBA's regional office in Portland, which oversees the program in Oregon and Southwest Washington.

"The sequester and government shutdown did have impacts on our mission," said Calvin Goings, SBA's regional administrator for Oregon, Washington, Idaho and Alaska. But, he said, "In the last couple of months, we are back on pace."

In the entire Oregon/Southwest Washington district, lenders have issued 357 total loans at the halfway mark in the current fiscal year, compared to 378 in the same period a year ago. That's almost a six percent drop. Those loans added up to $183.4 million, a 13 percent drop from the $210.9 million in loans from the same period last year.

The year-to-date drop in Southwest Washington loans has been more severe. Lenders issued 41 loans to Southwest Washington businesses in the first six months of this fiscal year, for a total of $18.1 million, according to the SBA. That compares to 56 loans totaling $31.3 million in the same period a year earlier. That's a 27 percent drop in the loan total, and a 42 percent drop in the dollar amount of the loans.

SBA's support for business loans can play an important role in the growth of small and emerging businesses. SBA's flagship program is its 7(a) loan guarantee, which makes capital available to small businesses and entrepreneurs to finance business growth or expansion. The agency's smaller 504 loan program provides long-term, fixed-rate financing for acquisition or renovation of capital assets.

A bright spot for the SBA is its microloan program, which provides loans of up to $50,000 for entrepreneurs pursuing home-based, online, and freelance business ventures. Three lenders offer those small SBA loans in Oregon and Southwest Washington, Goings said, and all three have doubled their loan numbers from a year ago. Those loans average just $13,000 in the local area, the SBA says.

SBA loans to businesses are made through banks, credit unions and other lenders. The government provides a guarantee on a part of the loan, giving lenders flexibility to take on riskier loans to small businesses and newly-established companies. In the Portland District office, U.S. Bank has issued the most SBA-backed loans, with 114 so far this fiscal year, followed by Wells Fargo with 46 loans. But Wells Fargo has the largest loan amount, with $23 million in loans, compared to just under $12 million for U.S. Bank.

The SBA saw a boost in demand for loans in 2010 thanks to incentives offered by the U.S. Recovery Act. Demand has remained strong as old and new businesses have positioned themselves to expand across all industry sectors while the economy recovers.

"We're seeing a return to optimism in all (business) categories," Goings said.

Alan O'Hara, who with his wife Amy owns "When the Shoe Fits" athletic stores, said SBA 7(a) loans were critical to his business expansion from the single store they opened a decade ago to four stores today in Salmon Creek, Fisher's Landing, Grand Central and Beaverton, Ore.

"With a retail store, our biggest expense is inventory," O'Hara said. "Loans need to be collateralized, and our inventory doesn't count very well." Without the SBA loan guarantee, he said, "We wouldn't have been able to get the amount we needed

SBA 7(a) loans

SBA 504 loans

."