According to the
SBA, more than $10.3 billion in loan guarantees supporting more than $12 billion in lending to small businesses were made in the three months between September 27, when President Obama signed the Small Business Jobs Act of 2010, and December 31, 2010. At Ridgestone Bank, we were proud to have been a part of putting a significant amount of capital into the hands of business owners, processing nearly $50 million in loan volume during the SBA’s fiscal year.
We were certainly busy, with two to three transactions on the closing docket weekly, and our approval committee reviewed, in most cases, anywhere from three to eight transactions weekly. The 90% guarantee from the SBA was a huge driver of this volume, and changes to the Alternative Minimum Standards as established by the program has allowed Ridgestone to work with many larger businesses who, in the past, would not have qualified for an SBA loan.
During this time, we saw a few trends that we feel are worth sharing:
- About one-third of our SBA loans were refinance transactions where the borrower had reached maturity at another lender. In these cases, the business owner was generally unable to refinance their transaction or was able to achieve better terms with an SBA loan. We helped many business owners improve their cash availability and achieve longer term amortization periods by refinancing through the SBA.
- About one third of our transactions could be viewed as acquisitions. In most cases, the business was buying the property they had been leasing up until that point. A recent success story is a transaction in which a private school bought the building they had been leasing for years, ensuring a familiarity with the location for their students and their parents for years to come.
- Given the lack of credit availability and fewer lenders in the marketplace, Ridgestone has seen more good quality transactions that may have, in the past, used a conventional lender. More businesses are now electing to use SBA financing to meet their needs.
As we move into 2011, we at Ridgestone are excited about the opportunity to help even more businesses.
Although the terms created by the Small Business Jobs Act of 2010 are no longer available, government-guaranteed lending through both the SBA and USDA remains a viable option for many businesses. As the number one USDA lender in the U.S. and the 10th largest SBA lender, we are looking forward to supporting businesses throughout 2011 and beyond.