Outlook for small business financing is becoming brighter
By Marilyn Bowden
With financing loosening up and the economy on the mend, the outlook for small businesses is better than it has been in some time, experts say.
"I am cautiously optimistic about the state of small business lending here in South Florida," said Francisco "Pancho" A. Marrero, South Florida district director for the federal Small Business Administration, or SBA.
"It certainly hasn't been easy. We have survived a difficult couple of years, but all indicators tell us that lending and the economy are slowly improving.
"South Florida's business community is perfectly positioned to take advantage of the President's National Export Initiative and SBA's renewed focus on government contracting. In a difficult economy, these are both great ways for small businesses to expand and create more jobs. It is precisely this type of growth that we need here in South Florida and that only small businesses can deliver."
He said the SBA made 256 combined 7(a) and 504 loans totaling $81,352,200 in the first half of fiscal 2011 — 77% of the loans and 73% of the dollar amount of the entire previous year.
The 7(a) Loan Program provides financing for general business purposes; 504 loans cover long-term, fixed-rate financing to acquire fixed assets such as real estate or equipment.
"We have about 40 bank clients," said Tony Argiz, chairman and CEO of the accounting firm Morrison, Brown, Argiz & Farra, "and they all want to get SBA-certified. They think that is the way to get out of this recession."
Banks have plenty of cash to lend to small businesses, said Monte Kane, principal of Kane & Co., CPAs and Business Consultants, but they are much more sensitive than they were pre-recession to proper collateralization.
"The credit requirements are tough," he said, "and those who might want to collateralize their homes don't have the equity they did before. So to that extent this will be slower than other recoveries. But there's money for those with good FICA scores who can demonstrate their ability to repay."
TD Bank, which is a designated preferred lender for SBA, is willing to work with business owners to try to get them to qualified status, said South Florida Market President Ernie Diaz.
"We're very encouraged and very bullish," he said. "We just initiated at the beginning of this month a small business blitz which has had a tremendous reception, and our business pipeline is growing.
"For businesses under $10 million, improvement in cash flow is critical for them to be able do business."
What's good for small business is good for Miami, Mr. Argiz said.
"Small business is the sector that has to recover, because we don't have those large companies," he said. "They are our main bread and butter to generate economic improvement over the next five years."
Many factors are helping to spur that recover, he said. "As tourism increases, more money comes into the area. It's been said that every 85 visitors create one leisure and hospitality job. These are low-wage jobs, but these visitors are also circulating money in the economy, and that creates jobs elsewhere.
"And with exports and imports also doing well, our small businesses should do better in the upcoming months."
"I see a lot of positive things happening," Mr. Kane said. "The hospitality industry is booming, and with that comes a multitude of other service industries that support it.
"The Port of Miami tunnel is well under construction, so it is becoming easier to transport goods and is growing the port, which is a vital part of Miami's economy.
"We are back to being a city that has affordable housing."
Mr. Argiz cited a recent Wall Street Journal article naming Miami one of five "new global cities," in company with Hong Kong, London, New York and Paris, as well as such developments as Museum Park and Swire's Brickell CitiCenter project, estimated to create close to 2,000 jobs and $14 million in tax revenues over the next five years, as additional growth stimuli.
What's hurting, he said, is unemployment.
"The market is not diverse enough yet," Mr. Argiz said. "Long term, we need more ties to the global economy."
Mr. Kane said transportation is also an issue. "Among the platforms of the many mayoral candidates," he said, "only one mentions this as a major problem in our county. The city is working on some alternatives, but there's very little dealing with the rapid transit situation."
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