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Hoping pilot programs spark more interest in small-business lending

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Business owners can only wait on the sidelines for so long before realizing it's time to invest in their companies, says Al Titone, of the Small Business Administration.
Business owners can only wait on the sidelines for so long before realizing it's time to invest in their companies, says Al Titone, of the Small Business Administration. - (AARON HOUSTON)

To revive economies in areas that need it most, the Small Business Administration is hoping two pilot programs will boost credit access for small businesses.

The SBA's Community Advantage Loan and Small Loan Advantage programs were unveiled in 2011 to achieve that goal.

Both programs build on the SBA's microloan program, which focuses on loans of $50,000 and less, in attempt to fill marketplace gaps not ordinarily covered by commercial banks.

Community Advantage, a three-year pilot program, distributes loans up to $250,000 through certified development companies. Small Loan Advantage loans, which run up to $350,000, are channeled through commercial banks.

Loans of more than $150,000 are 75 percent guaranteed, while loans below $150,000 are 85 percent backed, the federal agency said.

"In each case, it is designed to get money in the hands of business that would otherwise not be able to," said Al Titone, district director for the Small Business Administration's New Jersey office.

With Small Loan Advantage, the SBA assumes responsibility for screening loan applications from banks in effort to more broadly facilitate credit. SBA spokesman Harry Menta said early results from the program are encouraging.

"It's picking up," Menta said. "Our lender relations specialists are going to small banks, trying to promote the program."

In fiscal 2012, the SBA issued nine SLA loans totaling $1.33 million. Through April 30, or the first half of fiscal 2013, the agency said it has issued 23 such loans, totaling $3.6 million. The SBA hopes that figure will reach 50 by year's end.

Community Advantage loans are distributed through the UCEDC and the Regional Business Assistance Corp., a statewide organization based in Mercerville.

The SBA said UCEDC approved five Community Advantage loans totaling $670,100 in fiscal 2012. So far this year, the UCEDC has approved three loans totaling $420,000. RBAC approved eight Community Advantage loans totaling $1 million in fiscal 2012, according to SBA, compared with four loans totaling $280,000 so far this year.

RBAC Executive Director William Pazmino said he expects momentum to continue so that the Community Advantage program becomes permanent.

Broadly speaking, Titone said, while loan growth appears painstakingly slow, movement is headed in the right direction. He believes progress in New Jersey would have been quicker if not for business disruptions caused by Hurricane Sandy.

"There is only so much uncertainty for so long, eventually you have to pull the trigger," Titone said. "A small business, or any business, can only wait around so long waiting for something to happen."

E-mail to: tomz@njbiz.com
On Twitter: @biztzanki

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