Small Business Administration lending in Orange County grew at a torrid 40% pace in a recent six-month period while the number of loans climbed at a slower 2.4% pace, based on two lists published in this week’s Business Journal.
The largest 30 lenders on the dollar-value list generated a combined $238 million in SBA loans to OC borrowers, up from an estimated $170.5 million a year earlier.
Our second list ranks 41 lenders by their total number of SBA loans. Those firms combined for 389 loans, up 2.4% from 380 a year earlier.
The latter list suggests the average loan grew from $493,000 to $626,000.
Excitement, Confidence
• “We are seeing an increase in the average loan size in the Orange County market,” said Kirsten Hakes, MUFG Union Bank’s head of SBA lending.
The Irvine office of MUFG Union Bank saw lending almost triple to $10.3 million and eight loans, up from $3.4 million and six loans in the same period a year earlier.
The biggest reason is because it has beefed up its staff to handle more loans, Hakes said.
The bank, which operates under the Union Bank brand, moved from No. 23 to No. 5 on the dollar-value list.
“We do expect to continue to climb the rankings and increase our SBA market share,” Hakes said.
Excitement about the growing economy is causing small-business owners to consider taking out loans to expand facilities or hire more employees, lenders said. Plus, borrowers that believe interest rates will rise are jumping into SBA loans that require 10% down rather than the typical 20%.
“Generally speaking, I’m really pleased with the confidence that business owners are exuding to us,” said Emilie McMurray, a senior vice president and market manager for Orange County for JPMorgan. “They are continuing to hire employees, which is a big sign of confidence.”
JPMorgan jumped to ninth place from 17th last year as its dollar-value lending climbed 44% to $7.4 million.
Both lists are based on data from the U.S. Small Business Administration. The information presents lending data for the six months ending March 31 and includes only loans made to OC borrowers, regardless of lenders’ headquarters or branch locations. Lenders on both lists include banks, community development institutions and nonprofits that provide SBA loans.
• San Francisco-based Wells Fargo Bank remained in the No. 1 spot on both lists by lending $47.5 million, a 4.9% increase. Its loan volume fell 26% to 92 deals.
“Small business optimism is probably at its highest level since the recession,” said Steve Doss, a senior vice president who’s in charge of the bank’s SBA lending in Southern California. “Wells Fargo had one of its best years ever.”
The bank had fewer loans during this six-month period, probably because competition is increasing, although Doss expects the number of loans to increase later this year.
“Business owners are showing stronger balance sheets,” Doss said. “Businesses are expanding facilities or buying new buildings. You’ll see more borrowers jump in and purchase rather than lease.”
Wells Fargo’s deals resulted in a 24% market share in Orange County.
Only six entities on the list of 41 lenders made more than 10 loans during the period.
• Among the more notable increases was Cerritos-based First Choice Bank, which climbed to the No. 4 spot with $10.6 million and seven loans, up from No. 27 a year ago when it had $2.6 million in two loans.
“We’ve been cranking,” said Mason Carlton, the vice president of business development at the bank. “A lot of deals we do are declined by other banks. We’re just aggressive in finding solutions and get them done. We’re not foolish about it.”
Notable Mentions
Other noteworthy developments:
• Twelve new members appear on the dollar-value list, led by Laguna Hills-based Harvest Small Business Finance LLC, which reported $10.1 million in SBA loans for a No. 6 ranking.
The company provides commercial real estate loans from $200,000 to $5 million to customers in most industries.
• The biggest decline in lending was 89% to $1.6 million at Laguna Hills’ Pacific West Certified Development Corp., which was No. 4 last year but fell off the list this year. A message left for founder Bob Forsythe wasn’t returned.
• Another significant decline in the value of loans was a 46% drop to $3.8 million at Pacific City Bank, based in Los Angeles. An email sent to its SBA executive wasn’t returned.
