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Stimulus Programs, Recovery Push Big Jump in SBA Lending

Federal stimulus programs and the ongoing economic recovery helped bring another big boost in Small Business Administration lending in Orange County.

The amount of loans made here surged to nearly $220 million for the six months through March, according to this week’s Business Journal list of the 20 largest SBA lenders in the county.

That’s up nearly 81% compared to the same period a year earlier, when the same lenders accounted for about $121 million worth of SBA loans.

It’s the second dramatic increase in a row—last year’s list saw a 179% increase in SBA lending here.

Fifteen banks and other lenders on the list grew SBA lending in the past year.

Three posted drops and two did not do any SBA lending here a year ago.

Wells Fargo Bank, part of San Francisco-based Wells Fargo & Co., overtook San Diego’s CDC Small Business Finance Corp. as the county’s top SBA lender.

Wells moved up four spots in the rankings with $32.4 million in lending, up 232% from a year earlier.

Its 57 loans, up from 53 a year ago, were the second highest in the county behind New York-based JPMorgan Chase & Co.’s, which totaled 62.

“My team is doing a lot more 7(a) loans than we’ve ever done,” said Alan Epperson, who leads Wells’ business banking division here.

“All of That”

SBA 7(a) loans typically are term loans used to establish a new business or for equipment financing, acquisitions, operations or expanding an existing business.

“We’re seeing all of that,” Epperson said.

Mergers and acquisitions in the medical and dental industries also have spurred more 7(a) loans, he said.

Equipment financing has more than doubled from a year ago, counting loans made and those in the pipeline, according to Epperson.

CDC Slips

No. 2 CDC, a nonprofit, accounted for $22.5 million in SBA lending with 41 loans. The dollar value of CDC’s loans was down 33% from a year ago. Its number of loans was nearly steady.

A majority of the nonprofit’s SBA 504 loans in the past six months were fueled by the federal government extending fee waivers, according to marketing director Larry Nuffer.

SBA 504 loans, named for a section of the Small Business Act of 1953, typically are used for real estate and business equipment.

“Activity dipped in January, but slowly picked back up in February and March,” Nuffer said. “We remain optimistic.”

The fee waiver program was part of the Small Business Jobs Act of 2010, which President Barack Obama signed into law in September.

The legislation extended a fee waiver for SBA loans through the end of the year and upped the maximum loan amount from $2 million to $5 million.

Fee waivers can bring savings of thousands to tens of thousands of dollars for business borrowers.

The stimulus program also opened SBA 504 loans—often used by small businesses to purchase or put up buildings—for refinancing of business mortgages.

$42 B Program

The goal of the $42 billion jobs act was to help small businesses—car shops, manufacturers, restaurants and the like—expand and hire workers amid persistently high unemployment.

CDC had been the market leader for SBA loans the past two years.

The end of the fee waiver and a push by Wells to increase activity into SBA 7(a) loans were factors in CDC slipping from the top spot locally, Nuffer said.

Los Angeles-based Wilshire State Bank was the third most active SBA lender here. The bank, which moved up six spots on the list, accounted for $20 million through 18 loans. That compared to nine loans valued at $4.7 million a year earlier.

No. 4 Pacific Enterprise Bank in Irvine was the busiest private bank on the list. It loaned $18.5 million, up 7.5% from a year ago, with 22 SBA loans.

The federal government’s stimulus program and a renewed optimism among small business owners helped Chase increase lending, according to Sheryl Cameron, a regional specialty finance sales manager who oversees a team covering California.

Chase Gains

Chase rose to No. 6 from No. 13 a year earlier with $13.3 million in SBA lending, a 230% increase.

“Fee waivers that the SBA program offered definitely helped us increase SBA volume,” she said. “Business owners are looking at investing in their business, and replacing and increasing capacity because they’re optimistic about the economy growing.”

Hiring Plans

As SBA loan activity increases at Chase, so will its employment.

The bank is hiring small business relationship managers, loan advisors and support staff as part of its California expansion that will see 100 new branches in the state, with 65 of those in Southern California.

No. 17 U.S. Bank, a unit of Minneapolis-based U.S. Bancorp, was another national bank making moves in the local market. It posted 18 deals totaling $5.5 million, up 7.3% from a year earlier.

The list featured nine newcomers.

They are No. 9 Premier Commercial Bank in Anaheim; No. 11 Hana Small Business Lending, part of Los Angeles based Hana Financial Inc.; No. 12 Seacoast Commerce Bank of Chula Vista; No. 13 Los Angeles’ Gilmore Bank; No. 14 Nara Bank of Los Angeles; No. 15 Los Angeles-based Open Bank; No. 18 Community Bank of Pasadena; No. 19. United Central Bank of Texas; and No. 20 Commerce National Bank in Newport Beach.


Download the 2011 OC’s LARGEST SBA LENDERS list (pdf)

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