South Eastern Economic Development (SEED) Corporation announced today that its lending to small businesses had increased 20 percent in the fiscal year ended September 30, 2012. Under all its loan programs, SEED made 134 loans totaling $40 million. These loans assisted in the creation of 688 new jobs in the region, and leveraged another $73 million in bank loans and private funds.
“This is a great sign for the economy of our region. Small businesses are finally optimistic enough to take on new projects and expand their businesses, and new entrepreneurs are also more willing to start-up new businesses,” stated Maria Gooch-Smith, SEED’s executive director.
“SBA 504 loans, which finance the purchase and improvement of business real estate and equipment in participation with the region’s banks, provided small businesses with the lowest fixed interest rates in years, on average 4.3 percent fixed for 20 years” explained Gooch-Smith. “The lower down payment of 10 percent instead of 20 to 25 percent conventionally also helped small businesses take on projects and conserve working capital,” she added.
Gooch-Smith explained that 91 loans were approved and closed under the SBA 504 Program for a total of $38 million. These loans assisted in the creation of 495 new jobs and leveraged $66 million in bank loans and private funds.
Under SEED’s small loan programs, 42 loans were made for a total of $1.9 million. These loans ranged from $9,000 to $120,000, assisted in the creation 187 new jobs, and leveraged $7 million in bank loans and private funds. SEED made loans for working capital and capital improvements to a variety of small businesses from hair salons, day care centers, restaurants, inns, retail stores and manufacturers.
“Many of the smaller loans were made to businesses which could not qualify for conventional bank financing due to insufficient collateral, and tight cash flow, but they were viable community businesses which create jobs and are important to our region’s economy” stated Gooch-Smith.
According to Gooch-Smith, a commercial property for sale can represent an opportunity for a small business which currently leases space. Small businesses can now consider buying at advantageous prices and the lowest interest rates in years, and lower their monthly payments.
“The SBA 504 Program is the perfect financing option at times like this since the participating bank only has to provide 50 percent of the financing needed, and an SBA 504 loan provides 40 percent behind the bank. In addition, the SBA 504 loan carries a fixed interest rate for 20 years, currently 4.3 percent,” added Gooch-Smith.
Gooch-Smith explained that SBA 504 loans remain a great option for banks, since they mitigate bank lending risk on commercial real estate financing. Funds for SBA 504 loans come from the sale each month of long term bonds. These bonds carry the full faith and backing of the U.S. government, and present an attractive investment option for pension funds, insurance companies and other large institutional investors.
SEED is a non-profit economic development corporation established in 1982 to assist small businesses in the region. Under various programs, SEED makes loans from $1,000 to $5.5 million to assist small businesses to grow and create jobs.
SEED also provides technical assistance to small businesses and works with other economic development organizations and financing institutions in the region to ensure that individuals who are committed to owning and operating a small business are able to obtain the assistance they need to be successful.
For more information about the SBA 504 Program and other SEED loan programs, please call 508-1020 or visit SEED at www.seedcorp.com.
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