Monday, June 09, 2008
MANCHESTER – The U.S. Small Business Administration has seen a sharp drop in the number and amount of loans it guarantees through several programs to help businesses, both in New Hampshire and in the region.
As of May 23, the agency said it had thus far approved 416 loans in New Hampshire, totaling $68.7 million, in fiscal year 2008. That's down 32 percent and 22 percent, respectively, from the same period last year, when the agency had approved 618 loans totaling $87.7 million.
In the most recently completed quarter, 135 disbursed loans totaled $19,614,250, compared to 187 loans worth $28,131,200 in the second fiscal quarter of 2007.
Those numbers represent a sharp drop from recent record highs the agency had seen.
In fiscal year 2004, the agency approved 1,497 loans in New Hampshire totaling $152 million; in 2005, it approved 1,232 loans totaling $159.4 million. In all of 2007, the agency approved 818 loans totaling $122.6 million.
If the trends seen so far hold for the entire year, the agency's loan volume would be off roughly 63 percent from its record high, while the total loan amount would be down about 40 percent from its record.
In 2001, the agency approved 951 New Hampshire loans worth $96.2 million; in 2000, it approved 648 loans worth $79.1 million.
The federal agency operates on an October-to-October fiscal year.
Regional numbers
The downturn is by no means limited to New Hampshire.
So far this fiscal year, according to the SBA, the agency has approved 56,541 loans worth $11.8 billion nationally -- well off from how things were going at the same time last year, when the agency approved 82,272 loans worth about $15.1 billion.
That's a surprise to SBA officials.
"We really thought that, because of the way the economy is, if banks were really holding back on money, they would want to use our tools, our guarantees," said Sandy Blitz, the SBA's regional administrator for New England.
"The opposite has been happening. They have plenty of money and they're looking for good deals; if they find good deals, they don't need our programs."
Despite the guarantees associated with SBA-backed loans, they are not as profitable for banks due to associated fees.
Large banks have noticeably pulled back, Blitz said.
"When these big banks fall off, it really hurts us, big time," Blitz said.
The SBA does not actually loan money to businesses, other than through disaster loans. Rather, it partially guarantees loan repayments when banks make loans to businesses under its programs, which have specific guidelines and requirements. These include the SBA's 7(a) loan program for general business loans, and its 504 loan program, both of which are generally used for new facilities or equipment. But the guarantees don't come without a price tag -- lenders must pay fees to the SBA on guaranteed loans.
The SBA is working to correct the downturn, making a point of meeting with lenders and reaching out to business owners. An SBA-backed loan is a good way for a business to raise capital if traditional financing methods fail.
One thing Blitz has noticed is that, despite talk of a "credit crunch," lenders still have plenty of money to lend. It's the borrowers, fearful of the economy, who are holding back, he said.
The U.S. Small Business Administration's Concord District office released its list of SBA-backed small business loans disbursed in the fiscal second quarter, Jan. 1 through March 31.
Source: http://www.unionleader.com/
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