New Jersey is seeing steady growth in Small Business Administration loans, which are loans made by banks and other lenders that are partially guaranteed by the federal government. The dollar volume of SBA loans rose 23 percent in the fiscal first quarter, to $151 million, and the 2012 fiscal year that ended Oct. 1 saw $650 million in SBA loans, the third-highest year for New Jersey.
Al Titone, SBA New Jersey district director, said banks have tightened credit in recent years, and "that is one of the reasons we are doing so well. We give the lender a little more security," because the loan has a 75 percent or 85 percent federal repayment guarantee.
With that SBA backing, "banks feel better about doing certain loans. We are there for that narrow niche of folks with borderline credit that a bank might normally turn down. The SBA guarantee lets them do a loan they might normally not do."
Most small-business lending is done by banks for their own portfolios, outside the SBA. Bank of America, the largest bank operating in New Jersey, said its small-business lending across the state rose 28 percent last year, to $364.7 million. – Beth Fitzgerald