When the numbers rolled in for 2012 about Small Business Administration-backed loans in El Paso County, no one at Central Bank & Trust was surprised that their bank ranked in the top echelon.
The bank approved $11.3 million in SBA 7a loans — the most in dollar amount for the county in fiscal year 2012.
It is one reason why the bank has been named to SBA’s Preferred Lender Program, available to only the most experienced lenders, said Amy McDowell, SBA Colorado District Office spokeswoman. Central Bank & Trust joins a small group of community banks in the state allowed to process, close and liquidate most SBA-guaranteed loans without prior SBA review.
It puts Central on the same playing field with some of the big banks — namely, Wells Fargo and Chase, which have the SBA’s preferred lending backing.
“It gives us a much more competitive position,” said Gary Markle, president Central Bank & Trust, a division of Central Bancorp.
In fiscal year 2012, banks approved 97 SBA-backed loans in El Paso County. Wells Fargo approved the most — 23 loans for $5.8 million. Central Bank & Trust approved 14 loans.
“SBA loans are a very specific type of lending. If the bank does not have the expertise in house, it can be a painful process to the borrower,” Markle said.
According to SBA, seven Colorado-based community banks are considered preferred lenders. Central Bank & Trust appears to be the only community bank in Colorado Springs designated as such. (There could be others. Some banks may have applied for the preferred lender program designation in their home-base state and do business in Colorado, McDowell said.)
The advantage of an SBA-backed loan for the small-business owner is a lower down payment. Business owners also can take a 10-year-loan on equipment, instead of the more common five-year loan.
SBA can guarantee as much as 85 percent on loans of up to $150,000 and 75 percent on loans of more than $150,000. SBA does not set the interest rate on loans, only the maximum rate a bank may charge. The actual rate is negotiated between the lender and borrower.
Not all banks work with the SBA, said Barbara Walker, Independent Bankers of Colorado executive director. It’s a good sign when a community bank gets the SBA’s preferred lending program designation — it means the bank has the capacity to make the loans and it means the demand is there, she said.
“It’s a tremendous resource for small businesses in the area,” she said.
Central Bank & Trust had to prove itself worthy of being designated an SBA preferred lender, said Tony LeVeque, Central Bank & Trust executive vice president, senior business development office.
“(SBA) had to look at our history with them and certify that we are experts in what we do and deliver the program as it is expected through SBA,” he said.
Central Bancorp bought the New Mexico-based Farmers and Stockmens Bank three years ago and since then has worked to build its SBA and small-business lending, LeVeque said. Central Bank & Trust, in downtown Colorado Springs, has the underwriter, the closer and banker who specialize in SBA loans, he said. LeVeque expects the bank to increase its SBA loan program in 2013, in part because the process will be faster.
“For the people in our market, this puts us a step above the big guys,” he said. “A customer can come in and talk to everyone here — it’s very helpful to have the full SBA team.”