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Building relationship with local lender can be critical

A number of Mississippi banks are approved as Small Business Administration (SBA) lenders and offer these loans as an option to the small businesses in their communities.

John Allison, commissioner of the Mississippi Department of Banking, said, “These loans give business opportunities to communities and are a good thing. They’re usually given to new ventures and some businesses wouldn’t be able to start without them.”

Pike County National Bank opened for business in 1985 and made its first SBA-guaranteed loans in 1989. “We utilized the SBA to fund poultry loans for growers for Sanderson Farms when they opened in the early 1990s in Pike County,” said James Wicker, a vice president with the McComb-based bank. “At one point in the mid-1990s, over 20% of our total outstanding loan portfolio was government guaranteed with the majority of that being SBA loans.”

His advice to the small business person needing to expand a business or to those seeking to start a business is to contact a local banker who specializes in helping small businesses.

“Only those who are familiar with the needs of small businesses and the sources of funding available can evaluate the specific situation and recommend a suitable course of action,” Wicker said.

James Cocke has been helping small businesses with SBA loans for 35 years and is currently serving as the Mississippi business banking executive with multi-state Regions Bank. He finds the current market good for small business owners.

“There’s a perception that SBA is difficult, but getting an SBA loan is not a long drawn out process,” he said. “At times, the customer has not prepared when they come for a loan, and that’s what takes time.”

His advice to small business owners seeking a loan is to first go to one of the small business development centers around the state for help with a plan. “Do the marketing homework and have a package that’s thought out before applying for the loan,” he said. “Many people come to us who’re not ready to get a loan.”

Trustmark National Bank has maintained an SBA department dedicated to providing financial assistance to small businesses since the 1970s and provides these loans for customers in several states. According to Sessions Roland, senior vice president and retail lending manager, for the past 20 years Trustmark has consistently been recognized as either the top lender or the runner-up lender in terms of both the number of SBA loans approved and the dollar volume approved in Mississippi.

“Approval of an SBA loan is based on the same factors as other commercial loans — cash flow, collateral, credit worthiness, etc,” he said. “The primary benefit of an SBA loan is the longer terms that are available to the customer.

“Also, in some loan requests, if the only negative factor is a shortfall of collateral, the bank and SBA may still consider approval. The advantage to the bank to fund an SBA loan is the guaranty by the government that should the business fail, the government will pay the guaranty amount. The customer remains obligated for the full balance of the note.”

Sessions’ advice to small business owners is to do their homework. That can be done by visiting the SBA Web site at http://www.sba.gov and reading the information in the Small Business Planner and Services sections.

Wicker suggests that loan applicants present their banker with the following: business plan, financial information, projections, collateral and business equity.

“Be prepared to respond quickly and thoroughly with any additional information the lender requests,” he added. “Also evaluate the information you have assembled and make sure you are convinced that you are ready to proceed with the request or that the request still makes sense to you.”

Contact MBJ contributing writer Lynn Lofton at llofton656@aol.com.

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