The Santa Ana district of the Small Business Administration saw a record year, arranging 2,990 loans that generated more than $941 million for small businesses for the 12 months ended September.
The district is seeing more demand for loans as it expands its reach with local banks.
A year earlier, it arranged 2,705 loans for a total of $887 million.
Orange County saw a 4% increase in the number of SBA backed loans for the year ended September. They rose 4% to 1,551 loans for a total of $437 million.
“I believe we will continue to see an upward trend,” said J. Adalberto Quijada, who oversees the Santa Ana unit as district director. “We are in an area of tremendous growth.”
Quijada oversees the largest geographic region for the SBA, which is made up of San Bernardino, Riverside and Orange counties.
Local banks make the loans, with the government serving as guarantor. The loans may then be sold on the secondary market. The Santa Ana office lists 138 banks as partnering lenders.
Future interest rate hikes, a slowing economy and election results all stand to possibly derail lending growth.
Small business loan growth in Southern California has grown with the region’s economy. More new businesses have created new opportunities for lenders.
More than a dozen ethnic banks have emerged in the past couple of years, catering to small and midsize businesses.
The increased competition has given small-business owners better access to SBA loans. Its loans serve businesses that otherwise wouldn’t meet lending criteria.
Two years ago, the government raised lending fees 50%, up to 3.75% of loan values, to scale down the number of applications the SBA received. But an increase in smaller banks has stymied that.
“The birth of community banks has been a big influence,” Quijada said. “They’re relationship oriented and looking to carve a niche.”
There were 1,337 loans made to minorities for a total of $391 million for the year ended September.
In the past couple of years, Fullerton Community Bank, Costa Mesa-based Pacific Mercantile Bancorp and Irvine’s Plaza Bank have stepped in.
“We’re also starting to see more credit unions coming in,” Quijada said.
Partnerships with chambers of commerce and economic development agencies also are critical to the SBA.
“Our focus is to conduct marketing,” Quijada said. “Our goal structure puts an emphasis on programs for women and minorities.”
Growing Segment
As a result, women-owned businesses were the fastest growing segment for the Santa Ana district.
The unit made 574 loans to women business owners for a total of $147 million for the year ended September.
Three women’s business centers also were added. They offer resources such as training in marketing, writing business plans and finding funding. The business centers also give women a chance to network with other entrepreneurs.
The SBA also has expanded on the types of loans for businesses, helping to provide money for a variety of uses.
Loans depend on the needs of each business and can range from $5,000 to $2 million, according to Quijada.
In the past, loans were made primarily for a business’ expensive equipment. Loans for startups and acquisition are offered, as well as real estate.
Quijada’s office arranged more real estate loans than other districts,591 loans totaling $397 million for the year ended September.
The agency’s FastTrak loan allows banks to approve up to $100,000 without consulting the SBA, of which 50% may be guaranteed.
