Small Business Lending Up at Community Banks [News] | SBA 504 Rates and News From Liberty SBF
CRE loans at all sized banks in the U.S. were up by 9% last quarter from the year before but small banks have been the stars lending at double-digit rates over the past year, according to an article on Seeking Alpha. As a matter of fact the writer says that most business in CRE lending has been through smaller U.S. banks throughout the recovery and he thinks it will probably continue. Overall Commercial and Industrial lensing at smaller banks also outpaced larger banks. Over the past quarter smaller banks increased lending by about 13% while the 25 largest U.S. banks increased lending in this area by 10%.
Smaller banks fuel growth at small businesses because unlike corporations that have other options when raising capital (stock sales, bond issuances), small businesses turn to local banks for help. But a Federal Reserve report shows that source of cash is drying up as the number of community banks decreased 41% between 2007 and 2013, according to an article in Entrepreneur magazine. New bank formation has also stalled and the blame is place on the higher regulation and costs associated with the Dodd-Frank Act. Scott Shane, a professor at Case Western Reserve University argues in the article that community banks should be exempt from theses regulations. With their knowledge of local marketplaces, community banks are better prepared to evaluate factors that do not show up just looking at credit and cash flow when making decisions to lend to a local business.
Cash flow is the number one concern of small business owners, according to an article in Coleman Report. Commenting on another article that outlined what kept business owners up at night Bob Coleman wrote that the list was filled with annoyances more than concerns. His list included three items: Cash Flow, The Economy and Access to Capital.
TMC Financing, a West-coast based CDC, helped an artist purchase his own studio recently. Master potter, Adam Silverman financed the purchase of a 4,350-square-foot studio and showroom in Glendale, CA with an SBA 504 loan. The total project cost of just under $965,000 includes the purchase and subsequent improvements. Silverman is known for his textured pots, some of which take months to make. He had worked under another studio for the last five years and wanted to re-establish himself in his own studio.
TMC Financing was also named among the Best Places to Work in 2015 in the Bay Area by the San Francisco Business Times and the Silicon Valley Business Journal according to a statement. The rankings recognize outstanding companies whose employees rate them as having the best workplace cultures in the Bay Area. TMC Financing was founded in 1981 and is the largest provider of SBA 504 real estate loans funding projects worth more than $8 billion across California and Nevada for more than 4,700 businesses creating an estimated 35,000 jobs.
Dakota Business Finance, a South Dakota CDC, is co-sponsoring a market for locally made items on May 1 called Sioux Falls Made. The Sioux Falls Made Market will run from 11 a.m. to 7:30 p.m. in a repurposed garage at Argus Leader Media, located at 10th Street and Minnesota Avenue. The event is touted as a one-of-a-kind market for locally handmade and homegrown items featuring the work of 40 Sioux Falls-area vendors. Find out more here.
Meet up with Liberty SBF to learn all about our SBA 504 Loan and pick up a copy of our white paper to see why this is the best program for small businesses. We will be at the following upcoming conferences:
Trigild Spring Conference, April 22-23, Dallas, TX
SBA Lending Technical Conference, May 5-7, San Antonio, TX
NADCO Spring Summit, May 10-13, 2015, Washington DC
8 Plus 1 Things You Need To Know Right Now (That’s 9):
• Will the SBA’s flagship program be a victim of its own success?
• 8 small business tax preparation mistakes to avoid
• Small business: Backbone of the economy
• Coleman Report interviews Kent Hoover of The Business Journals
• What small businesses should ask about their tax preparation software
• 10 quick tips for small business growth
• SBA names Huntington Bank top Michigan lender for 6th year
• Media training tips for small businesses
• At the crossroads of health care and innovation
Click here or current SBA 504 rates.
SBA Rates and Commentary From Liberty SBF – Not All SBA Loans Are Created Equal
All Small Business Administration Loans are not created equal. If one lender turns down your SBA loan, don’t despair because you can always take it to another lender. We often look at loans that have been turned down by others.
Although SBA loans are guaranteed by the Federal Government program, each lender goes through its own underwriting standards based and what the administration sets in its guidelines. Ami Kassar explains the ins and outs of this in his article on the Wall Street Journal website.
The FOMC statement marked a bit of a change in how the Feds measure when to start increasing interest rates. “The committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the committee views as normal in the longer run,” according to the Fed.
President Obama has hit a sore spot with his overtime pay proposal. The Wall Street Journal is reporting that the move will hurt small businesses that have relied on overtime instead of hiring new workers to defray costs while the economy continues to recover.
Small businesses have been bitten by Jack Frost. The National Federation of Independent Business reported its small business optimism index dropped to 91.4 in February, from 94.1 in January, its lowest reading in almost a year, reported the Wall Street Journal.
But retail sales have reportedly risen 0.3% in February from -0.6% in January (revised from -0.4%). December’s numbers were also revised from -0.1% to -0.3%. Auto sales were up 0.3%, furniture sales gained 0.4% and building materials rose 0.3%. The surge in sales might have something to do with the winter thaw as we saw somewhat less snow. If the weather improves, and sales go up, can confidence be far behind?
At least some pome people are happy. The number of millionaires is at an all time high, according to reports.
Finally, if you think about how science fiction might become real life fact, then National Journal’s article asking if robots are taking over our jobs might be a good read today. Economists offered their opinions on the subject but it might not be as silly an idea as one might think.
Small Business Administration (SBA) Weekly Rate Sheet:
3.25% I WSJ PRIME FLOATING RATE
4.14% I 5-YEAR LIBOR SWAP FIXED RATE
Liberty SBF directly funds Owner-Occupied Commercial Real Estate Loans up to $13M.
Current Par Rates on “A” Paper – Top 20 MSAs Only on Multi-Use Real Estate, Office and Industrial Properties.
10-25 year term
20-25 year amortization
• Focus on professional office and industrial properties. (Other property types considered on a case-by-case basis)
• Up to 90% LTV on owner-occupied commercial real estate transactions.
• Up to 65% LTV on conventional commercial real estate acquisitions and refinances.
• Personal credit score of 675 or better.
• DSCR > 1.20x
SBA Rates And Market Commentary From Liberty SBF For Feb. 21, 2014
Ami Kassar posed this question in his blog on the Wall Street Journal website: Has small-business lending really improved?
Kassar said many businesses have been able to climb out of the Great Recession in a better position than they started, making themselves more bankable.
“The credit-worthy group has gotten bigger and it seems the approval process has gotten easier, but the fact remains that there is still only a small percentage of businesses that are bankable,” he wrote.
For those who aren’t in that top tier the choices have expanded.
“On the flip-side, nonbankable small-business-owner options have increased exponentially and these business owners are more likely to get a loan today than they were a few years ago,” Kassar said.
In its small business blog, The New York Times reported that social media is king to Millennials. “Millennials put more stock in social media than they do in government, business or religious institutions,” wrote blogger Gene Marks.
The Times also reported that small businesses have been learning from the big guys when it comes to cutting costs.
“Thanks to the rise of online job marketplaces, small businesses are increasingly using foreign contract workers to lower their costs,” the paper reported.
Coleman Report reviewed SBA lending out of Credit Unions vs. banks over the past few years. They found that the interest from Credit Unions in originating SBA loans has been on the decline since 2009 from a standpoint of number of loans but average loan size has nearly doubled.
“The Coleman 500 for FY 2013 (published November, 2013) showed that four banks single-handedly made more loans and seven banks achieved a higher loan volume than all credit unions combined,” Coleman reported.