Download the 2010 OC’s SBA LENDERS LIST (pdf)
Lenders are giving more money to small businesses here.
The amount of loans made by the largest 20 Small Business Administration lenders in the county jumped to $155 million for the six months through March, according to this week’s Business Journal list.
That’s more than double the amount made by the 20 largest SBA lenders on our list at this time last year.
When the largest 20 companies on this year’s list are compared to themselves a year ago, the jump is even more dramatic.
Loans were up 179% from $56 million made a year earlier.
“I wouldn’t say we’re totally out of the woods yet, but we’re seeing strong indicators that the market has bottomed,” said Larry Nuffer, marketing director at No. 1 San Diego-based CDC Small Business Finance Corp.
The nonprofit lender was the leading player in the county for a second straight year. It made 40 SBA loans, double from a year earlier, worth $34 million, up 147%.
Southland Economic Development Corp. made No. 2 with 29 loans totaling $18.7 million. A year earlier it made almost $6 million worth of loans in eight transactions.
The third most active lender and the busiest private bank was Pacific Enterprise Bank in Irvine. It lent $17.2 million through 26 loans. That compared to seven loans valued at $2.9 million a year earlier.
Reasons Behind Rise
A cut in fees proved to be a significant stimulus for the bank’s increased lending to small businesses, according to Richard Ganulin, Pacific Enterprise’s chief executive.
He estimated that such reductions—part of a federal stimulus plan to spur small-business lending that first was enacted last year—are saving borrowers about $25,000 on a $1 million SBA loan.
Another big reason for the jump in loans was that the federal government increased its SBA guarantee to 90% from 75%. That eliminates just about all risk for private lenders, which spurred more to make loans.
“Banks usually take those SBA loans and sell them in secondary markets,” Ganulin said. “By increasing the amount the government will guarantee, we can increase our activity.”
Local banks make the loans and then often sell them as bonds with interest payments going to the buyer.
At No. 4 was a new player, Los Angeles-based Excel National Bank. It made 12 loans worth $13 million.
In all, nine of the top 20 were new to the list, as the list is more of a snapshot of a market that can fluctuate from year to year, even quarter to quarter.
Thirteen of the lenders saw increases in the amount of money doled out, while only two saw drops. The other five lenders didn’t give any money to OC small businesses a year earlier.
The biggest new entrant in terms of number of loans was No. 13 JPMorgan Chase & Co.
The New York-based financial services company entered the local market through its 2008 acquisition of Washington Mutual Inc.
Chase had 37 SBA deals worth $4 million in the six months through March.
“We strive to be the top SBA lender in each market. OC is a very important market for us and we see great opportunities for us in the future,” said Sheryl Cameron, a vice president at JPMorgan Chase & Co. who manages a marketing team covering California.
Wells Fargo & Co., which was the second-biggest SBA lender a year ago behind CDC Small Business Finance, wound up as No. 5 on this year’s list.
While it increased the number of loans it gave to 53 from 31, the total dollar amount dropped 2% to $9.8 million compared to a year earlier.
“Last year at this time, we didn’t see demand increasing,” said Alan Epperson, OC manager for Wells Fargo’s commercial banking unit. “But we’ve seen a complete shift in the past three months.”
The number of SBA loans done in the past few months has doubled compared to a year earlier, according to Epperson.
“We were optimistic coming into the year,” Epperson said. “But the recovery is progressing better than we expected in OC.”
No. 7 EDF Resource Capital Inc. saw the biggest drop in loans, funding 11 loans totaling $6.8 million. A year earlier it made a dozen SBA loans valued at $7.7 million.
Among top national banks making moves in the local market, No. 8 U.S. Bank, a unit of Minneapolis, Minn.-based U.S. Bancorp, had 13 deals totaling $5.1 million.
Also, two banks making this year’s list were involved in recent management changes.
No. 17 Manhattan Beach-based Beach Bus-iness Bank earlier this year struck a deal to buy First Financial Bank’s lone branch in Costa Mesa. It increased that OC presence by making four SBA loans worth nearly $3 million.
No. 18 Irvine-based Plaza Bank was rescued last June by a fund set up through Carpenter & Co., an Irvine research and consulting firm, and made five loans valued at $2.9 million.