A 13.2% growth in Small Business Administration loans by dollar value would normally be a celebration in Orange County.
But that’s down from the 40% growth reported last year.
Furthermore, a fierce battle for market share is ongoing, as only three of the top 10 on last year’s Business Journal lists of the county’s biggest SBA lenders repeated. In fact, not one of the 28 firms on the dollar-value list retained the same rank as last year.
• The biggest surprise was Wells Fargo & Co.’s 74% tumble to $12.5 million in loans, knocking it out of first place for the first time in four years (see separate article, page 1).
On the other hand, 11 entities reported lending growth climbed more than 100%.
• For example, Business Finance Capital soared 18 spots to No. 2 by tripling loan production to $14.6 million. The Los Angeles-based firm issued 13 loans, double that of a year earlier.
“The market’s doing great,” said Jacky Dilfer, executive director of the nonprofit firm. “We’re still seeing a lot of activity.”
Dilfer attributed the OC growth to a business development officer new to the nonprofit and increased marketing to the commercial real estate and banking sectors.
Like other SBA lenders say, she indicated there’s a lack of buildings to finance. She said her firm is gaining traction by helping customers lock in interest rates so they’re unaffected when rates continue to rise as expected.
“Though real estate commercial prices have gone up due to the inventory shortages, we’re seeing battles for every building in escrow.”
The Lists
The Business Journal, in addition to ranking SBA lenders by the dollar value of loans over the period, publishes a second list ranked by the number of loans.
The lenders on this year’s dollar-value list generated $210.8 million in SBA loans to OC borrowers in the six months ended March 31, up from $186.3 million a year earlier.
The loan-number list reflects 374 loans, up 5.1% from a year earlier. The list, which ranks 41 lenders, indicates the average loan fell 2.1% to $605,251.
Both lists are based on data from the U.S. Small Business Administration. The data includes only loans made to OC borrowers, regardless of the lender’s headquarters or branch locations. Lenders on both lists include banks, community development institutions and nonprofits that provide SBA loans.
The lists include two types of loans: the 7(a) program, which permits business acquisitions, equipment purchases and debt refinancings; and 504 loans used for owner-occupied commercial real estate purchases and refinancing, along with larger equipment purchases, with as little as 10% down, versus the typical 20% to 25% for conventional banking products.
About 18 of the 28 entities on the dollar-value ranking reported an increase in that category. Only 10 entities on the list ranked by number of loans made more than 10 loans during the period.
n Eleven new firms appeared on the dollar-value list, led by No. 5, Pacific West Certified Development Corp., whose loans soared sixfold to $11.1 million. The Laguna Hills-based firm issued nine loans, up from two a year earlier. It was the biggest decliner on last year’s list, an 89% decrease.
Notable Mentions
• Bank of the West leapt 9 spots to first place after doubling lending to $16 million. The San Francisco-based bank grew loans from six to 11.
• JPMorgan Chase & Co. jumped from ninth place to third with $14.3 million, a 92% increase. On last year’s list, it climbed from 17th place with a 44% increase in lending.
“What we see in Orange County supports a positive business outlook,” said Emilie McMurray, market manager for Chase Business Banking overseeing the OC area.
• List newcomer Pacific Premier Bancorp made the biggest leap percentagewise in dollar amount as its SBA lending climbed 26-fold to $9 million, placing it ninth. The Irvine-based bank is poised to become the biggest based here by assets when it acquires Grandpoint Capital Inc. this year.
• Kinecta Federal Credit Union reported a tenfold increase in lending to $6.2 million, the number of loans tripling from two to six.
“Loan demand last year was fairly strong,” said Shane Knighton, first vice president of business services at the Manhattan Beach-based credit union. “As people get around the idea of normalized interest rates, they’ll still need that capital. I don’t see the demand softening. It will continue to grow.”
The firm spent the prior year “retrenching” offerings, Knighton said. It focused less on broker relationships and started working more with members and small-business development agencies.
“This year, we executed on that plan,” Knighton said. “We’re starting to see the fruits of our labor.”
• CDC Small Business Finance in Irvine reported a 50% decline in loan value to $9.1 million while the number of loans it made fell 24% to 19.
“The reason for the lower numbers is a lack of inventory,” said Mark Hogan, the CDC’s expert in 504 loans.
“There are fewer buildings for sale. There are a finite number of owner-type buildings on the market.”
On the bright side, Hogan said CDC partnered with Wells Fargo to issue the first-ever 25-year SBA loan.
“We got some publicity. It was one minute of my 15 minutes of fame,” he joked.
