Home » NEWS » Banking & Finance » ITS A DEAL — Small business lending in the state is on the rise, including Mississippi’s first SBA microlender

ITS A DEAL — Small business lending in the state is on the rise, including Mississippi’s first SBA microlender

By BECKY GILLETTE

While the recovery from the recession has taken longer than hoped, increases in U.S. Small Business Administration loans in the state are a sign the economy of Mississippi is on the upswing.

Through the third quarter of the federal fiscal year, the SBA Mississippi District saw loans surpass $100 million, representing an increase in lending to small businesses in the state. The loan dollar volume was $4.21 million more than the previous year.

“We perceive the increase in SBA loan approvals as an indicator of more confidence in our state’s economy, which is a good thing,” said Janita R. Stewart, director of the Mississippi SBA District Office. “In comparing the current federal fiscal year 2015 stats to where we were this time in FFY 2014, 404 loans have been approved for $149,173,400. In comparison to 375 loans for $130,099,600, a significant increase in SBA lending.”

SBA doesn’t make loans directly to small businesses under its regular business loan programs (non-disaster related). To help provide capital to small businesses and entrepreneurs to startup, grow and succeed, SBA works in conjunction with a host of in and out-of-state bank and non-bank lending institutions and certified development companies.

“And neither these lenders nor the business owners would take on the undue risk of financing if they didn’t have enough belief that the deals they’re doing would garner success,” Stewart said. “So, things are looking up.”

SBA loans are being made throughout the state.  In looking at the congressional districts breakdown, districts 1 and 2 have increases as follows: District 1:  Last year – 30 loans for $15,326,100 and this year – 49 loans for $19,297,500. District 2:  Last year – 54 loans for $12,754,400 and this year – 68 loans for $21,985,800. District 3, which is the district that traditionally has the largest number and dollar volume in loans and still does, has a slight decrease in numbers and dollars so far this year over last year; and District 4 saw an increase in dollars this year, but has the same total number of loans as last year, so far.

District 2, which primarily encompasses the Mississippi Delta, continues to be one of the most economically challenged areas in the state and country. But Stewart said on the upside, SBA loan approvals are being made in the Delta which includes loans to underserved markets.   District 2 is experiencing a significant increase in numbers and dollars of loan approvals, she said.

During this current fiscal year, the following industries in Mississippi are most prevalent in SBA loans to start-ups: Food service (restaurants, including franchised pizza restaurants), agriculture (primarily poultry farms), automotive, fitness centers, convenience stores, trucking, hotels, and professional services such as dentists, doctors and lawyers.

Stewart said SBA loans approved in Mississippi through June 30 created 886 jobs and helped retain 1,529 jobs which yield positive impacts for the state.

A significant development for small businesses on the Gulf Coast is that the Gulf Coast Renaissance Corporation has been selected as a Mississippi-based SBA microlender. The SBA’s Microlender Program defines an intermediary microlender as a non-profit organization with experience in lending and technical assistance. Intermediaries can offer microloans up to a $50,000, with $13,000 being the average loan amount for eligible borrowers. The program will allow Renaissance, one of only approximately 200 SBA microlenders in the country, to accept applications from start-ups and established small businesses and create loans with more flexible terms than found through traditional lending on a local level.

“To be selected as the only Mississippi-based participant in the SBA’s Microlender Program is certainly an affirmation that Renaissance continues to move in a direction that strongly supports the economic growth of our state,” said Kimberly LaRosa, CEO and president of Renaissance. “There is definitely a need for microlending on the Coast even though it is 10 years after Hurricane Katrina. Small business is the backbone of the economy in Mississippi. By growing that, we will be creating more jobs. This new designation gives us a pool of funds we can use to help small businesses get open or expand. Any job added to the economy reverberates to main street, the community and eventually the state.”

LaRosa said in addition to having $200,000 available for loans, the designation includes a $50,000 grant component that will be used to give businesses technical assistance before the loan closes, and also support after the small business opens.

“We believe that having us as a partner will be helpful if they hit upon any difficulties,” LaRosa said. “We will be there to give them advice through the first critical years. I think the important message is we work with people who are not ready to open a business today to get advise so they are ready to open their business putting best practices in place and going about becoming a business without exposing themselves financially and operationally too much.

Stewart said there is definitely a market for small businesses in need of smaller than average loan amounts coupled with technical assistance to get them where they’re trying to go. She said microloans, which can be strong financial options for small businesses that may be unable to meet traditional lending requirements due to a lack of credit history or limited operating experience, can be used for working capital, inventory and supplies, furniture, machinery and more. The maximum repayment term is six years with the loaned amount varying on the plans and needs of the borrower.

About Ross Reily

Ross Reily is editor of the Mississippi Business Journal. He is a husband to an amazing wife, dad to 3 crazy kids and 2 dogs. He is also a fan of the Delta State Fighting Okra and the Boston Red Sox.

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