Despite end to incentives, SBA loan activity jumps

The number of U.S. Small Business Administration-backed loans to New Jersey businesses rose 13 percent in the first half of the fiscal year, while dollar volume rose 48 percent, despite an end to federal SBA incentives that fueled lending in the past.

The number of U.S. Small Business Administration-backed loans to New Jersey businesses rose 13 percent in the first half of the fiscal year, while dollar volume rose 48 percent, despite an end to federal SBA incentives that fueled lending in the past.

Alfred J. Titone, New Jersey district director for SBA, said his office approved 735 loans for $394 million from Oct. 1 through March 31, compared with 648 loans for $266 million the previous year.

“A lot of businesses were sitting on the wayside waiting to see what would happen, and at this point, they have more confidence,” Titone said. “I have heard from businesses and lenders that there has been an improvement in cash flow. Businesses that were waiting are now taking the plunge.”

The average loan increased to $536,000, from $410,000 last year, which Titone called, “an indicator that they (businesses) are looking to expand, not just increase inventory,” thus setting the stage for hiring, he said. The higher loan size “usually means they are investing in equipment or in the building, and are looking to grow and expand, and we are very excited about that.”

SBA loans are loans made by banks and other lenders that are partially guaranteed by the federal government, with the banks retaining a portion of the repayment risk. Titone said he had been concerned loans would decline in the first quarter, when the SBA ended an incentive program that had guaranteed 90 percent of the loan, and waived a fee — but instead, lending increased. In addition, “we are seeing willingness from our lending partners to invest larger dollar amounts in our small businesses,” Titone said.

Five counties showed significant increases in SBA loan approvals. Hunterdon County was up 170 percent; Burlington, 62 percent; Atlantic, 57 percent; Somerset, 50 percent; and Mercer, 38 percent.

The top five SBA lenders in New Jersey for the first six months of fiscal 2011 were: J.P. Morgan Chase Bank, with 74 loans for $10.6 million; TD Bank, 67 loans for $12.8 million; Metro Bank, 44 loans for $50.4 million; New Jersey Business Finance Corp., 36 loans for $28 million; and BNB Bank, 35 loans for $20.3 million.

E-mail Beth Fitzgerald at [email protected]