SBA, Areawide still making loans to finance business improvements

Although lending has slowed down nationwide, in part due to concerns about the financial industry, The Tennessee District Director of the U. S. Small Business Administration said that SBA lending in Tennessee this year has been on a par with last year.

Clinton Smith, who heads the state’s SBA offiuce in Nashville, made his comments at Areawide Development Corporation’s annual meeting Tuesday, Sept. 23, at Egwani Farms Golf course in Rockford.

Areawide Development Corporation located in Alcoa, markets and processes U.S. Small Business Administration Section 504 loans to small businesses in partnership with banks to help finance capital projects. Although not untouched by the national downturn in the financial industry, Smith and Areawide officers noted in comments to members that the number of Section 504 loans approved at the state level, and in the East Tennessee market that Areawide serves, are only slightly lower this year than last.

“The interesting thing is that the dollars are way up,” said Smith. As compared with last year when the state generated 59 loans for a total of $31 million borrowed, for 11 months this year through Aug. 31, he noted 55 loans were generated that totaled $42 million. With another two loans sought in September, that amount could increase to $45 million if approved by the Sept. 30 end of the government’s fiscal year.

“The 504 program continues to be a great economic development tool,” he continued.

This year’s lending activity had resulted in 934 new jobs being created and 325 retained in Tennessee as compared with 710 jobs created and 295 retained last year. Companies must create or retain jobs in order to quality for SBA Section 504 financing.

Nationally, Smith acknowledged that Section 504 loan demand was down about 20 percent, with 8,200 loans being approved through Aug. 31, as compared with 10,700 for fiscal 2007.

Don Woods, Areawide’s Director, added that it had funded nine SBA section 504 loans totaling $6.5 million through August, as compared with 11 loans totaling $8.5 million in fiscal 2007.

“Our portfolio remains in pretty good shape,” Woods said. Areawide currently has 87 loans outstanding, which total $35.5 million. Of that number, only two were one month behind in payment. They have had no defaults in the past 11 months.

Don Woods and Terry Bobrowski, Executive Director, East Tennessee Development District, added that it now offering a Small and Minority-Owned Businesses loan program, which is funded through the state. Since starting the loan program last spring, Bobrowski noted ETDD has approved seven applications and funded four projects with $287,000 in funding.

The loan program targets very small businesses and those with minority ownership or that are in rural areas. One project for which an application has been approved is an ice cream shop in Knoxville’s enterprise zone. Another was to allow a man who had worked for a home improvements company to buy a truck and go into business for himself, Bobrowski said.

“We really look for good things from this program,” Bobrowski said.

G. Alan Sieve is a freelance writer and photographer who lives in Maryville. Reach him at gasphoto@esper.com.

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