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For small business, it was the best of years

David Levesque

01/04/1999

John M. Mallon said it was good to be a small business in 1998.
The president of Cranston’s Yushin America, Inc., a manufacturer of
robots used in plastic injection, saw a 25 percent increase in revenues
this past year.
“It was the best year for us in our 10-year history. The results of all
our previous efforts came through,” said Mallon, who predicts expansion
next year and additional jobs.
He said growth in his company’s market share and assistance with a Small
Business Administration loan as well as help from the state were some
elements of a successful year.
Yushin was not alone.
“Generally, small businesses across the board have had a pretty good
year,” said Bank Rhode Island President Merrill W. Sherman. “I say that
for two reasons. First, our activity is up and, second, delinquency and
troubled credit is basically nonexistent.”
She said the success of small businesses is due to a strong local
economy.
“Whether it is a stationary supply business, small manufacturer or
service oriented business, they seem to be making ends meet and creating
a profit,” Sherman added. “I see, for the most part, smiles on peoples’
faces going into 1999.”
A Smaller Business Association of New England (SBANE) survey result
tends to support Sherman’s assessment. The survey found that 72 percent
of small businesses contacted expect an increased demand for their
products and services through next fall.
The survey also found that 49 percent of those who responded to the
survey indicated that they will be hiring more staff between now and
next May. Three percent said they will be cutting staff during the same
period.
The twice-a-year survey queried 276 companies with 100 or fewer
employees.
“Our local economy is proving remarkably robust in the face of great
changes occurring in domestic financial markets and around the world,”
said SBANE Executive Director Julie M. Scofield. “Since the early 1990s
we’ve seen sustained entrepreneurial activity that has created numerous
new companies and thousands of jobs. We expect this to continue.”
Like hundreds of other small businesses, Yushin, a joint venture with a
Japanese company, received financial help through a Small Business
Administration (SBA) loan.
The Rhode Island SBA district office had 535 loan approvals totaling
$100.8 million in fiscal year 1998.
“It was a great year for small business. Credit was fairly readily
available, interest rates were low and the lending community was
strong,” said Marilyn A. Bogue of the Rhode Island office of the SBA.
The SBA also streamlined loan programs to make the process easier for
entrepreneurs to tap into.
The SBA unveiled late in the year two new ways to get what promises to
be hassle-free government-backed loans.
The New SBA LowDoc and the SBA Express loans were dubbed by District
Director Joseph P. Loddo “the dynamic duo for the SBA.”
The New SBA LowDoc is an upgrade of the agency’s most popular loan
product. The LowDoc (or low documentation) loan program was first
launched in 1993 and within a year the product accounted for 40 percent
of all SBA loans.
The new version of this program increases the maximum loan amount from
$100,000 to $150,000 and requires the SBA to respond to applications
within 36 hours, instead of 48 hours.
Patrick K. McGowan, regional administrator for the SBA, said the agency
guarantees the loans up to 80 percent for amounts as high as $100,000
and up to 75 percent for amounts between $100,000 and $150,000.
The SBA Express loan allows preferred lenders within the SBA’s Rhode
Island district to provide loans up to $150,000. The same 36-hour turn-
around exists. With SBA Express, lenders can use their own forms to
approve loans and must provide minimal paperwork to the SBA for a 50
percent guaranty on the loan.
“The Rhode Island small business community will now have additional
tools to assist in its continued economic development,” said McGowan.
“We believe that (the programs) will provide additional capital to the
small business community.”

Citizens Bank led the pack as an SBA lender in Rhode Island. For the
fourth consecutive year, Citizens Bank (a $6 billion subsidiary of
Citizens Financial Group) was the number one lender of SBA loans.
Citizens topped all Rhode Island lenders in both number of loans and
dollar amount, with 139 loans totaling $22 million. In New England,
Citizens Financial Group approved 332 loans for $36.7 million in
financing.
Realizing the market Citizens has taken a hold of in the region, Geneva
Business Bank of Providence opened its doors in 1998.
Geneva’s sole purpose is to grant small to mid-sized business loans,
making it one of eight non-depository banks in the state.
A. Michael Marques, president of Geneva, said he likes what he has seen
so far.
“I think they are doing well and as long as the economy stays strong I
don’t know why they would not do well,” said Marques.
He said most loans today are for what he called “productive purposes,”
like buying property to house a business or equipment.
“I don’t see many major, non-productive uses like buying out partners.
The small business owners tend to be cautious. They are smart enough to
understand that it will not allows be like this,” Marques added.