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Sunday, 31 August 2014 22:00

Statewide SBA lending up 5.5 percent

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Lending backed by the U.S. Small Business Administration continued to grow in Michigan into the final quarter of the federal government’s fiscal year.

Lending under the SBA’s two main loan programs, known as 7(a) and 504, totaled $593.1 million through 1,930 loans at the end of July. The collective value of loans increased 5.5 percent and the number of SBA-backed loans grew 13.1 percent for the first 10 months of the 2013 fiscal year.

The growth came through the SBA’s 7(a) program. Banks participating in 7(a) wrote 1,768 loans for $593.1 million through the end of July, which compares to 1,489 loans for $444.8 million during the same period in the 2013 fiscal year.

Tom McFadden, a lender relations specialist with the SBA’s district office in Detroit, attributed the 7(a) growth to increased demand for credit spurred by the state’s economy.

Under the 7(a) program, small businesses can borrow up to $5 million for a variety of purposes. Borrowers typically use the loans for acquiring another business, to buy real estate, fund facility expansions, or for capital purchases such as machinery and equipment.

Huntington Bank is the largest 7(a) lender in Michigan through July, accounting for a little more than half of loan volume. Huntington wrote 897 loans under the 7(a) program for $139.0 million during the first 10 months of the current fiscal year. JPMorgan Chase Bank was second at 122 loans with $17.2 million, and Comerica Bank was third at 50 loans for $44.2 million.

Lending under the SBA’s 504 program, generally used by small business owners to buy property or buildings or to build a new facility or renovate an existing facility, declined through July from the same period of the prior fiscal year. The SBA in Michigan approved 162 loans for $91.3 million under the 504 program, versus 207 loans for $117.0 million a year earlier.

As with 7(a), McFadden attributes the decline in 504 lending to the economy. As it’s gotten better, fewer businesses have been referred by their bank to the 504 program for credit that they perceive as “a little less competitive.”

“As some businesses are getting stronger, they don’t feel they need an SBA loan,” McFadden said. “They feel they can get a better deal from the private sector.”

504 SBA loans are generally coordinated by certified development corporations. Through July, the Lansing-based Michigan Certified Development Corp. handled 86 loans for $40.7 million, followed by the Economic Development Foundation in Grand Rapids at 37 loans for $13.8 million.

 

Read 2776 times Last modified on Sunday, 31 August 2014 23:05

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