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SBA reports early successes with GO Loan program

Even before Congress passed the Gulf Opportunity (GO) Zone Act of 2005, which helps businesses in 40 Mississippi counties affected by Hurricane Katrina rebuild and expand, and attracts new investment and new businesses with more than a dozen tax incentives, the U.S. Small Business Administration (SBA) began beefing up its staff of lenders in Mississippi for its GO Loan Pilot Program.

“Since the beginning of the fiscal year, October 1, we’ve brought on 15 new SBA lenders, and they cover the regular 7(a), Express Loan and Gulf Opportunity (GO) Loan programs,” said SBA district director Janita Stewart. “Right now, we have 11 GO Loan lenders in Mississippi who are starting to use that pilot program. As of February 10, we’ve made 30 GO Loans in Mississippi for just over $1.7 million.”

Even though the SBA doesn’t directly help small business owners understand all of the provisions related to the GO Zone Act, SBA resource partners have hosted numerous workshops involving SBA representatives.

“One of our pieces of recovery assistance is the GO Loan program, where we provide the guarantee to the lender who makes loans to businesses within the zone,” explained Stewart.

The SBA has approved more than $4 billion in disaster loans to homeowners, renters and businesses affected by Hurricanes Katrina, Rita and Wilma, surpassing the previous record set after the Northridge Earthquake in 1994. Louisiana leads in disaster loan approvals at $2.4 billion, followed by Mississippi, at $1.4 billion.

The year-long GO Loan Program expedites small business financing to those communities severely impacted by Hurricanes Katrina and Rita. The agency provides its full guaranty and streamlined and centralized loan processing to qualified lenders that agree to make expedited SBA 7(a) loans available to small businesses located in those disaster areas.

GO Loan features targeted relief for small businesses (maximum loan amount is $150,000), SBA’s most favorable guarantee (85%), streamlined paperwork for lenders and borrowers, expedited processes for members of the Preferred Lender Program and immediate eligibility for SBA Express lenders.

“This particular loan program expires in September, though it may be extended, and of course, we’ll continue with the disaster assistance programs we already provide,” said Stewart.

Bob Seals, corporate marketing director for Gulfport-based Hancock Bank, said customers were able to tap into $1 million available through SBA’s GO Loan Program beginning in January.

“Early on, we partnered with the SBA and SBDC (Small Business Development Center) to obtain loan applications or conventional credit, whatever the customer’s specific need was, to quickly help him get back on his feet,” said Seals.

Teresa Speir, director of the Gulf Coast SBDC in Bay St. Louis, who has hosted numerous workshops for new entrepreneurs and established small business owners, said the demand for information has increased dramatically since Hurricane Katrina struck the Mississippi Gulf Coast August 29, 2005.

“We’d usually have 10 people make a reservation and four would show up,” she recalled. “Now we have 10 people make reservations and 15 show up. We follow workshops with one-on-one counseling, as entrepreneurs get ready to go to the bank or look for a different type of financing. That’s where the SBA has helped tremendously getting information out and working through the red tape. The more information people have, the better able they are to make decisions about how to use the loan or what part of it to go after. The big part is translating the information to the individual needs of the business.”

Since the hurricane, Speir and one associate, covering six counties in South Mississippi, have worked with 982 people in workshops and one-on-one counseling, averaging 35 to 50 people per week.

“In the past, our thrust has been working with people starting businesses, but we’re pushing more toward existing businesses now because you’re seeing a lot of them starting to come back,” said Speir. “We’re hearing: ‘I want to start my business back, but the climate has changed, my customers have changed, where I get my product has changed, my location has changed.’ We’re helping with a lot of post-Katrina marketing.”

Right now, the biggest challenge for disaster-affected businesses is finding a location in which to re-open. “Small business owners are having to be real creative about where they open because so few places area available,” said Speir.

“They’re having to renovate space or build a facility. Once that decision is made, the next step is finding financing.”

Contact MBJ contributing writer Lynne W. Jeter at Lynne.Jeter@gmail.com.

About Lynne W. Jeter

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