SBA lending growing for small business, exports
By Rachel Tannenbaum
The Miami district of the US Small Business Administration, which helps entrepreneurs start and grow businesses, is stepping up both small business lending and funding to aid exporters.
"We have been doing what we have always done and we are really aggressive with recruiting lenders," said Athena Harris, assistant Miami district director for marketing and outreach.
SBA loans granted in South Florida have been steadily mounting after a rapid dive with the economic decline, though Ms. Harris said it will take a long time to climb back to the 2007 level.
In 2007, 1,513 loans made in Miami-Dade totaled $212 million. In 2010, just 426 loans were granted totaling $154 million.
"We have been recruiting banks, especially small banks, that haven't been affected as bad by the recession," Ms. Harris said. "We are working to get bankers back into this program."
Although small business loans are slowly increasing again, the Miami district has nearly doubled loans for exporting.
Since April 2010, the SBA has been offering more loans for exporting. The federal government's commitment to the president's National Export Initiative aims to double US exports and create 2 million new jobs by 2014, Ms. Harris said.
"Exporting promotes a lot of the worldwide market," she said. The "bulk of business is outside of the US; there are 7 billion people on this planet."
Exporters can apply for the Export Work Capital Program (EWCP), which allows small businesses to finance their exports to cover the 60- to 120-day delay from the time they ship their products to the time they get paid, she said.
"EWCP helps bridge the gap between payments and the loan is based on the receivables they've shipped, Ms. Harris said.
South Florida's district loan office accounted five of those export capital loans in 2006, totaling $3.55 million. In 2011, it accounted for 11 totaling $15.8 million.
"While exporting loans represent a small percentage of the number of loans we do overall, you'll see that the number of them is steadily increasing year after year," Ms. Harris said.
Since many US banks don't provide working capital advances on export orders, the SBA provides lenders with up to a 90% guaranty on export loans up to $5 million as a credit enhancement, so that the lenders will make the necessary export working capital available.
The State of Florida also offers a STEP grant, the state trade and export promotion grant, to help exporters. The money is used to promote trade missions for small exporters and to get into the foreign market, Ms. Harris said.
"We attribute this steady rise in the aggressive recruitment by SBA of lenders to participate in the program, their growing appreciation for the value SBA brings to their lending activity and servicing the needs of their small business customers," she said.
The SBA, founded in 1953, is a loan guarantee program, but the SBA doesn't provide grants or loans directly. It guarantees loans made to small businesses by other institutions.
Headquartered in Washington, each state has at least one SBA office. Florida has two, in Miami and Jacksonville. The Miami district covered the 24 counties south of Orlando, not including Orlando.
Ms. Harris said the SBA provides assistance four ways:
nThrough access to capital or business financing, the SBA offers access to capital ranging from small needs, like microlending in short-term loans, to substantial debt and venture capital, or equity investment capital.
nThrough access to federal contracting, small businesses are provided with subcontracting procurement opportunities, programs and training.
nThrough entrepreneurial development and access to counselors, Ms. Harris said, entrepreneurs are able to ask questions like "what to do first" and "how to expand." SBA provides free individual face-to-face and internet counseling for small businesses and low-cost training.
nLastly, the SBA helps small businesses with long-term disaster recovery, providing low-interest loans to repair or rebuild when inventory and business assets that have been damaged or destroyed are a declared disaster.
"This is when we bridge the gap between insurance companies and give direct loans," Ms. Harris said.
Entrepreneurs trying to start a business or small businesses looking to expand can turn to the 7(a) Loan Guarantee Program, a working capital program designed to help them through bank and non-bank lending programs, often when they aren't eligible for loans elsewhere. The major type of 7(a) loans are express programs, export loan programs, rural lender advantage program and special-purpose loans program.
Entrepreneurs looking to buy real estate or a business turn to the 504 program, which long-term, fixed-rate financing. Of the total project costs, a lender must provide 50%, a Certified Development Company up to 40% through a 100% SBA-guaranteed debenture and the applicant about 10%.
In 2010, the maximum on these loans increased from $2 million to $5 million through the Small Business Jobs Act, which Ms. Harris said gives small businesses more opportunity for growth and expansion. She said loans can be as low as $5,000.
"If people need help," she said, "we are able to offer it."
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