SBA lending falls in state despite loan volume boost

The Small Business Administration has increased its loan volume nationally by 40 percent or $5.5 billion since the federal stimulus act was approved in February, but SBA lending in Nevada contracted rapidly in the last year.

SBA's Nevada district counted $88 million in 262 SBA loans made by banks and other lenders during the first nine months of the current fiscal year, less than half the $209 million total for 758 loans for all of last year.

"We're a reflection of the economy," said John Scott, Nevada district director for the SBA. Many small businesses use equity in their homes and home values are plunging in Southern Nevada, Scott said. Also, the area's tourism and gambling industry is reeling as Americans cut back on nonessentials, such as entertainment and vacations, he said.

Scott reported the loan totals for Nevada on Wednesday after hearing SBA Administrator Karen Mills discuss how the stimulus bill had helped small businesses recover despite the recession.

Mills spoke to 500 people attending a joint meeting of the Asian Chamber of Commerce, Latin Chamber of Commerce and Urban Chamber of Commerce at Paris Las Vegas.

She said President Barack Obama's administration has been revitalizing the SBA after it languished over the last eight years under former President George W. Bush.

"It's 180 degrees different," Mills said in an interview.

During the previous administration, the SBA staff was slashed to 2,000 from 3,000 and its budget was cut 25 percent, she said.

"There was an ideological feeling that there really wasn't a role for government, that government should be small," Mills said of the Bush administration.

In February, however, Obama signed a $750 billion stimulus bill that included $730 million for SBA programs. In addition, small businesses will be given an opportunity to be prime or subcontractors on $400 billion of "shovel-ready" stimulus projects planned for 2009, she said. These include highway and bridge projects as well as the new veterans hospital in North Las Vegas.

About 600 community banks have begun making SBA loans again, Mills said. The SBA has introduced programs that shorten the turnaround time for SBA loans and that allow banks that only make a few SBA loans to use their own forms.

"A large number of banks we have brought back are coming because they want to lend but they don't have liquidity and they are worried about their balance sheet," she said.

Under the new America's Recovery Capital loan program, struggling but viable small businesses may be able to qualify for a $35,000 interest-free loan and delay payments for 12 months. The ARC loans then are paid back over five years.

"This is a one-time deal," she said. The SBA has enough money to help 10,000 businesses with ARC loans and then it will be gone.

Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420.