financial services

SBA approves $22M in small business loans

Posted 1/11/12

(Updated, 4:45 p.m.)

PROVIDENCE – Small business loans approved by the U.S. Small Business Administration exceeded $22 million in the last quarter of 2011.

Between Oct. 1 and Dec. 31, 76 Rhode Island firms won approval for SBA-guaranteed loans, including 61 loans for $9.1 million under the agency’s popular 7(a) program, generally used for routine needs, including inventory purchases, payroll and the like. These loans are obtained through a commercial lender and guaranteed by the SBA.

In what could be a particularly heartening sign, 13 SBA 504 loans were approved in the final quarter. These provide long-term, fixed-rate subordinate mortgage financing for major acquisitions and renovations, provided by a certified development company working with banks and other lenders. The 13 loans represent $12.8 million in capital.

In the federal fiscal year 2011, which ended Sept. 30, 45 of the 504 loans were made in the 12-month period, according to figures provided by Normand T. Deragon, public information officer for the Rhode Island office of the SBA. If the same rate of lending continues, district director Mark S. Hayward said the 2011 total could be surpassed in the 2012 fiscal year.

“It is very possible,” he told Providence Business News, attributing the added increase to “reasonable real estate prices” and the fact that 504 loans can be refinanced.

The other two of the 76 loans were micro-loans for $60,000 made through the South Eastern Economic Development Corporation based in Taunton.

Hayward said he sees “lots of room for movement” in lending due in large part to three factors: banks are liquid, small businesses need additional capital; and interest rates are “extremely favorable.”

“I am pleased that the SBA is making a difference for these 76 Rhode Island small businesses,” he added. “Providing more than $22 million in capital will make a significant contribution toward improving the Rhode Island economy.”

The top fourth-quarter lenders were: Bank Rhode Island, nine loans for $663,000; Bank Newport, eight loans for $2.1 million; Citizens Bank, eight loans for $541,500; Coastway Community Bank, six loans, $870,000; Washington Trust Company, six loans, $356,500.

Ocean State Business Authority in Providence was the top certified development company in the final quarter, responsible for six 504 loans for $2.25 million.

Providence businesses received the most loans - 10 totaling $1.8 million. Rounding out the top five communities are: Portsmouth with seven loans, $1.2 million; Cranston, six loans, $1.8 million; Pawtucket, six loans, $718,000; and Warwick, five loans, $420,000.

For the same time the previous year, 188 SBA-backed loans were approved for $69.5 million. Deragon attributed last year’s large number to several factors, including federal stimulus money that bolstered the funds available, as well as a 90 percent loan guarantee and waiver of application fees, both of which expired at the end of 2010. “There was a huge rush by the banks to get these loans in under the wire,” Deragon said.

More information is available at the Rhode Island District office web site at www.sba.gov/ri.

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