Colorado SBA lending reaches record highs

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The number of small business loans made to Colorado business owners in fiscal year 2004 exceeded all previous records. Statewide, 1,872 loans were approved by the Small Business Administration’s network of more than 120 participating lenders. This marks a 27 percent increase over the number of loans approved in 2003.

In El Paso County, 173 loans totaling about $52 million were approved through September 30, said Chris Chavez, regional communications director for SBA Colorado. “We’ve seen the economy start to pick up during the last 12 months,” Chavez said. Of the loans approved, 1,577 were made through the 7(a) Loan Guaranty program. The 7(a) program is the administration’s general business loan program. The administration approved 295 loans under its 504 Loan Program, which provides fixed rate, long-term financing for building, land and equipment. In all, the Colorado district office and its network of lenders supplied about $486 million to small businesses in the state.

An increase in marketing and outreach helped make 2004 a record year for small business lending. “Our media outreach has been phenomenal,” said Patricia Barela Rivera, the administration’s Colorado district director. “Our outreach is paying off and it’s a true accomplishment.” The Colorado district holds resource fairs and financial seminars, all free and open to the public. “It’s all to promote small business lending,” Chavez said.

Outreach efforts also have attracted more women and minorities interested in owning their own businesses. “For the last five years we’ve seen that trend increasing in minority business ownership,” Chavez said. Of the 1,577 7(a) loans approved, 436 loans totaling $104.4 million were made to minority-owned firms. “Hispanic businesses, for example, are the fastest growing market in the nation,” Chavez said. Women-owned firms received 403 loans valued at $88.6 million. “More and more women are buying businesses,” he said. Veteran small businesses were approved for 187 loans worth $43.6 million.

Wachovia SBA Lending Inc. led El Paso County in gross loan dollars provided to small businesses. Wachovia approved 16 loans totaling more than $10 million. Dan Rundgren, senior business development officer for Wachovia, is accustomed to the top spot. “I’ve been doing this for a long time and Wachovia’s been No. 1 for about 12 out of the 13 years,” Rundgren said. “We specialize in this type of financing. So many banks have so many products, but this is our only one.”

Typical Wachovia loans in El Paso County range from $300,000 to $5 million, Rundgren said. Wachovia approved more than $28 million in 7(a) program loan dollars statewide, making it the No. 3 lender in Colorado.

Statewide, Wells Fargo Bank provided the highest number of 7(a) loans, 325, totaling more than $53 million. Wells Fargo approved 50 loans valued at more than $9 million in El Paso County.

“One of the main reasons we’ve seen such an increase in SBA lending is we’ve seen a number of new lenders, like Capital One and American Express,” Chavez said. “Capital One is the second-highest lender in Colorado now.” Capital One and American Express offer small business lending online. “Both of them are credit card-based and people can go to their Web site and there is a section there for small business and they can actually pay for the loan online,” Chavez said. The administration provides a 50 percent maximum loan guaranty through the SBA’s Express Program.

“The ease is such that Capital One and American Express are really marketing to the small business owner,” Chavez said. “There’s an influx of new lending options. Rather than handing out a check, a lot of lenders in the future will start using lines of credit.”

The majority of businesses receiving loans from administration lenders are in the service industry. “I’d say 80 or 90 percent of the loans we do are going to be to service businesses,” Chavez said. This includes restaurants, hotels and motels and recreation firms.

The Pikes Peak Regional Development Corp. was No. 3 in El Paso County in gross loan dollars approved, a total of more than $9.3 million. The corporation is a 504 lender, providing loans to purchase buildings, heavy equipment and land. Between 2 percent and 5 percent of loans approved in Colorado go to manufacturing firms, Chavez said.