Page 6
The Banker’s Advocate
State Bank Department
SBA 7(a) loans approved in Arkansas
Volume falls
despite SBA
incentives
$80

Fee waivers can’t ignite
$70
$76.9
small business lending $60
n
s
As the current economy
$50
$52.6
$49.4
continues what appears to
i
llio
$40
be a slow trek towards
improvement, small busi-
I
n
m
$30
nesses – the creator of
$20
more than half the jobs in
$10
the U.S. – still find financ- $0
ing difficult. It appears
2007 2008 2009
that large banks and non-
bank lenders have cut
Number of loans 393 240 155
back on loans and lines of
Original amounts for three quarters ending June 30 of each year Source: Arkansas Capital Corporation
credit while smaller banks
About the author
using part of the stimu-
don’t have the capacity to lus money to waive fees
fully fund the financing
Al Hodge is senior vice president for lending at Arkansas
Capital Corporation Group (ACCG), Little Rock. ACCG affiliate
associated with both the
needs of small business.
Six Bridges Capital Corporation is one of two Certified Devel-
504 and 7(a) loan pro-
The FDIC reported that
opment Companies (CDC) in Arkansas that have been certified
grams: the 1.5 percent
the balance of loans to
by the U.S. Small Business Administration (SBA). The other
504 processing fee paid
small businesses and
CDC, West Central Arkansas Planning & Development District,
by the borrower; the 0.5
farms declined 1.9 percent is based in Hot Springs. percent fee paid by the
during the 12 months 504 participating lender,
through June 30. standards or terms on increase SBA’s guaranty which usually is passed
The percentage of commercial and industrial from 75 percent to 90 on to the borrower; and
banks reporting a tighten- loans. Also, weaker de- percent on certain loans. the entire 7(a) guaranty
ing of standards on com- mand for these loans from While the small busi- fee.
mercial and industrial small firms was reported, ness sector of our econ- Since most small busi-
loans to small firms is on net, by 55 percent of omy regularly produces 60 ness lenders have stated
decreasing, according to domestic respondents. percent to 80 percent of SBA fees are the major
the July 2009 Senior Loan It is evident that lines of all new jobs, the $730 mil- obstacle keeping them
Officer Opinion Survey credit - the lifeblood of lion represents less than from participating in the
on Bank Lending Prac- any business - are being one-tenth of one percent loan programs, one
tices, conducted by the cut back for even good of the entire appropria- would derive that SBA
Federal Reserve. How- businesses in Arkansas. tion. 504 and 7(a) volume
ever, on net, 35 percent of The American Recovery The unprecedented Re- would increase at this
domestic banks reported and Reinvestment Act of covery Act is an opportu- time of decreased fees.
tightening standards in the 2009, the $787 billion eco- nity for small business That is not the case
preceding three months. nomic stimulus package, owners but the con- in Arkansas and the en-
Respondents to the sur- provides $730 million to strained flow of credit and tire nation. The number
vey almost unanimously the U.S. Small Business other factors in a highly of SBA 504 loan ap-
cited a less favorable or Administration (SBA). stressed economy have provals is down 138
more uncertain economic This includes $375 million been overwhelming chal- percent in Arkansas and
outlook as one of the rea- to eliminate fees associ- lenges. down 40 percent nation-
sons for tightening credit ated with lending and to For example, SBA is
See SBA, Page 7
September 30, 2009
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