By : Jonathan D. Epstein
Source : http://www.buffalonews.com
Category : Small Business Grant
What a difference a government loan guarantee can make.
The Orleans County village of Holley is getting a new grocery store, thanks to a $171,167 state grant and a $775,000 bank loan, backed by a 75 percent guarantee from the U.S. Small Business Administration.
That means $581,250 of the loan is effectively “insured” by the federal government, which made it easier for the bank to extend the loan.
The new store in Holley illustrates how the SBA’s loan guarantee programs are designed to help small businesses start or grow, while also benefiting the community at large.
Without the nearly $1 million financial package — and particularly the loan guarantee — the Save-A-Lot grocery chain might not have opened a store in the former Jubilee Foods site at 3 Geddes St.
“The people of Holley should have access to a quality grocery store that provides local farm-fresh products at affordable prices,” said Rep. Kathleen
A. Hochul, D-Amherst, who says she
helped Save-A-Lot pursue federal funding after Holley’s mayor raised the issue to her.
The loan to Save-A-Lot is one of 221 loans totaling $34.9 million that lenders in the Buffalo and Rochester areas have made in the last five months, since the start of the SBA’s fiscal year Oct. 1. All of those were made under
SBA’s 7(a) loan guarantee program for working capital loans.
Buffalo-based M&T Bank Corp. continues to lead the pack handily, racking up 76 loans for $8.79 million so far. That’s more than twice the number of loans and 73 percent more dollars than its nearest competitors, Warsaw-based Five Star Bank, part of Financial Institutions, and Hamburg-based Evans Bancorp, parent of Evans Bank.
Five Star was second in loan numbers and third in dollars, with 37 loans for $5.08 million as of the end of February. Evans was third in number but second in dollars, posting 17 loans for $5.09 million.
By number of loans, Key- Corp’s KeyBank came in fourth, with 14 for $1.43 million, followed by Genesee Regional Bank with 13 and Lyons National Bank with 11 for just over $1 million. By dollars, Genesee Regional was fourth, with $4.6 million, followed by Bank of Castile with $2.62 million in 10 loans and CapitalSource Bank with a single loan for $1.95 million.
Overall, seven of the loans went to exporters, totaling $3.08 million, while 10 went to veteran-owned businesses, for $974,500. Both segments are key areas of focus for the agency.
In SBA’s 504 program for real estate and other fixed assets, eight lenders have made 15 loans for $7.5 million since October. M&T again leads, with four loans for $3.27 million, followed by Evans with three loans for $1.31 million. HSBC Bank USA and First Niagara Financial Group were tied, with two loans each for $828,050 and $614,250, respectively.
Small businesses are widely considered the engine of the nation’s economic growth, comprising 99 percent of all companies, employing about half of all private-sector workers, generating more than half of the nation’s economic output and creating 70 percent of new jobs.
Indeed, from 1993 to 2007, companies with fewer than 100 employees created 44 percent of net new private-sector jobs nationwide.
But that fell to just 16 percent in 2010, while the smallest companies — those with fewer than 50 employees — created just 3 percent of new jobs. So the federal and state governments have worked to jump-start the nation’s moribund economy by encouraging more growth, spending and borrowing by small businesses.
“Getting small-business owners the capital they need to open their doors, build inventories and hire workers is essential to solving the most important economic challenge of the day — creating new jobs,” said Janet Coletti, senior vice president for business banking at M&T, the nation’s No. 6 SBA lender.
That’s why the Obama administration and Congress implemented special incentives for SBA loans, such as waivers on fees and higher guarantee limits. Those stimulus benefits spurred more borrowing while they were in effect, since it was cheaper and easier to do so. But they’ve since expired, so SBA lending levels have fallen again compared with a year ago, prompting some lawmakers and other observers to call for the incentives to be reinstated.
Meanwhile, President Obama has also shined more of a spotlight on the SBA after elevating the agency’s administrator to a Cabinet-level position, giving it the same prominence as other major government departments.
“We’ve seen from experience that improving loan programs and reducing loan costs for small-business borrowers can help spur additional lending to small businesses, and that has a meaningful impact on small businesses and the economy,” Coletti said.
“To make small businesses our engine of job growth again, this new Cabinet-level position should consider reintroducing those [incentive] measures and taking other steps to make SBA loans even more focused on the needs of small-business owners.”
Source : http://www.buffalonews.com/business/article759260.ece
