Local lenders see positives in SBA program enhancements

One of Southern Nevada's most active Small Business Administration lenders says SBA loan program enhancements that the White House announced will help turn on the spigots at banks and increase credit availability here.

"I think banks will start marketing the SBA program because it is now the best provider of long-term capital for small business," Cal Regan, executive vice president of small business lending at Nevada Commerce Bank, said Tuesday. He runs a staff of 15 at Nevada Commerce Bank's SBA department. He previously led SBA lending at Silver State Bank, which closed in September.

Regan commented on the SBA program that President Barack Obama announced Monday.

The key benefits, Regan said, are the increase in loan guarantees up to 90 percent on standard SBA 7(a) loans and the waiver of fees under SBA loan programs, he said.

The maximum government guarantee previously for standard SBA 7(a) loans was 50 percent to 80 percent. Increasing the portion backed by the SBA to 90 percent reduces the risk for SBA lenders, he said.

A business borrowing the maximum of $2 million under the 7(a) program could save $52,000 in fees.

These loans may be used for a variety of purposes, Regan said.

Yet, SBA 504 loans, which businesses frequently use to buy real estate and equipment with long lives, are more popular at the moment, he said.

A business often use 504 loans to buy real estate for use in its operations, including offices and retail locations.

"You can get some unbelievable (real estate) deals out there now," Regan said.

Bobbi Bennett, president of the Nevada Development Corp., one of the biggest originators of 504 loans in the state, also is upbeat about improvements in the SBA program.

"There really are some aspects that could be very beneficial to banks and to businesses to get the banks lending again," she said.

"I do believe it will help small businesses," Bennett said. "I'm cautiously optimistic that this will be great for the SBA program in Nevada and elsewhere in the nation."

In particular, she expects more 504 loans for owner-occupied real estate and equipment.

In recent months, businesses have complained that banks, struggling with delinquent loans and internal financial problems, have been reluctant to make new loans. Some bankers say loan demand has been slack.

SBA loan demand was low in December and January, Regan said, but he has noticed a pickup in SBA loan applications since late February.

"We've actually seen 13 new loan requests since the last week in February," Regan said.

"I think business will pick up, because I think businesses will see this (small business program) as a good opportunity," Regan said.

Under the American Recovery and Reinvestment Act, which Obama signed Feb. 17, the SBA will lend up to $35,000 to small businesses that are having difficulties making payments on existing conventional business loans. The government guarantees 100 percent of these loans and no payments are required for a year.

Dennis Meservy, a certified public accountant, said he favors efforts to loosen the loan market for small businesses. "It will do some good," Meservy said.

Yet, he remains skeptical that "it is going to be a significant change for the economy."

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