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SBA nondisaster lending increases, despite aftermath of Sandy

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    A $47 million increase in New Jersey Small Business Administration lending in the six months ended March 31 is a positive sign given the challenge posed by the state's recovery from Super Storm Sandy, according to SBA New Jersey District Direct Al Titone.

    The increase "is surprising and it's very good news," Titone said. "I really thought Sandy would have hurt us more."

    SBA loans, which are loans by banks and other lenders that are partially guaranteed by the federal government, rose to $313 million in the six months, while the number of loans declined slightly to 528 loans, from the 535 loans in the first half of the prior fiscal year.

    JP Morgan Chase made the most SBA loans in the first half, 57 loans for $8.6 million, while the largest lender in dollars was Noah Bank of Elkins Park, Pa., $45 million and 30 loans.

    Bob Streb, vice president, sales manager for SBA lending at Chase in the Northeast, said Chase pro-actively markets SBA products, which has advantages "even if (the company) could get that loan on a conventional, non-SBA basis." Streb said while there are fees of between 1 and 3 percent for an SBA loan, "there is a lower down payment, as low as 10 percent, and we can do equipment (lending) on a 10-year basis, as opposed to 5 or 7 years," for a conventional loan.

    SBA is a small portion of Chase small-business lending, which totaled more than $400 million in New Jersey in 2012. Streb said the SBA guarantee enables Chase to finance companies that would otherwise not qualify, perhaps because of past losses or because the company is a startup. "It's a terrific vehicle to get capital access to clients and prospects who otherwise might not be able to quality for lending."

    Streb said an SBA borrower can eventually grow into a company to whom Chase can make a conventional commercial loan: "When you deliver for them they really do appreciate it and for the most part will stick around for years to come."

    Titone said the lending increase reflects, in part, business borrowing to prepare for the summer tourism season. "Despite some pockets (hit hard by Sandy) on the Shore, a lot of the Shore is going to be up and running," he said. "And it is not just the Shore that has summer business — a lot of the rest of the state has also."

    The figures don't include SBA disaster loans to help businesses, homeowners and renters recover from Sandy's devastation. To date the SBA has made 11,322 Sandy disaster loans in New Jersey, for a total of $731 million, the agency said. Of that total, businesses received 1,340 loans, or $126.6 million, with the balance going to homeowners and renters.

    Given the strong growth of nondisaster SBA lending, "My thinking is that folks who were not hit really hard by Sandy are continuing to invest," Titone said. "I'm pleasantly surprised, and I think it's a really good indicator for us."

    May 1 is the deadline to apply for Sandy disaster loans to repair physical damage from the storm. SBA spokesman Harry Menta said that deadline has been extended several times, and he doesn't know if it will be extended again. July 31 is the deadline to apply for disaster loans if the business suffered economic damage from the storm.

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    Beth Fitzgerald

    Beth Fitzgerald

    Beth Fitzgerald reports on health care, small business and higher education. She joined NJBIZ in 2008 after a 34-year career at the Star-Ledger and has been reporting on business in New Jersey since 1978. Her email is beth@njbiz.com and she is @bethfitzgerald8 on Twitter.

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