Small-business owners talk loans with banks at SBA event

Beth Fitzgerald//July 18, 2012//

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About 80 small businesses signed up to have one-on-one meetings with 15 lenders Wednesday morning in Parsippany, with a strong turnout of borrowers and lenders that several participants said could be a harbinger of better days ahead for the economy.

The U.S. Small Business Administration sponsored the “matchmaker conference” where a steady stream of potential borrowers held sit-down meetings with loan officers. Mary Adelman, assistant director of the Small Business Development Center of Northwest Jersey, said the turnout was “awesome — people are looking for loans to expand their businesses.”

Zafar Iqbal, a research professor of chemistry at New Jersey Institute of Technology, was seeking bank financing to bridge the gap between research grants and venture capital. He is developing biologically-based battery technology to power a pacemaker; the battery would be a fuel cell that generates power from the blood’s glucose and oxygen. He’s been working for several years with $800,000 in federal research grants, and needs about $150,000 in bank bridge financing to get to the next stage, at which point “I will need a half million or $1 million in venture capital to begin commercialization,” he said.

Currently, pacemaker batteries are replaced every five years or so; a biological battery could eliminate the need for additional surgery.

Keith Bass said he is looking for a bank loan to expand his Sabur Transportation company, a car service in Union County. “I’m a one-man operation, and I have to turn customers away. I want to hire a few more people and get a few more vans.”

Karen Marques, of PNC Bank, said she’s been busier with loans this year than last, with a number of her customers reporting profit increases of 10 percent or more. Loan demand is coming from retail, manufacturing, medical and dental practices. “Doctors are buying more equipment or looking to buy into another practice,” she said.

James Stortz, vice president of Unity Bank, said when potential business borrowers bring their financial statements to the bank, “I’m seeing a little better performance this year than I had in the past. The main thing we look for is cash flow, the ability to repay the debt.” For several years he’s seen companies “taking advantage of a soft real estate market to move from leased space to buying their own property.”

Among the SBA loans now on his desk: $270,000 for a startup auto repair franchise; $875,000 for a used car dealer that will switch from renting to owning; and a winery seeking $1 million to move out of rented space and purchase its own facility. He said he’s about to make a second loan to a professional clown that has an ice cream shop and is buying a building.

However, the economy “has a way to go” toward recovery, he said.

“A lot of businesses are waiting to see what the election is going to bring; there is a lot of pent-up demand, and there is a lot of cash that businesses are sitting on and waiting to see if they should expand or not.”

Charles Ruffin, of Emigrant Savings Bank, said he’s seen an uptick in loan requests. “Smaller businesses are struggling somewhat, but there is definitely a demand for capital out there. A lot of banks want to lend to established middle-market companies, so we’re seeing a large need for the small business owners to obtain capital.”

Tri-Co Federal Credit Union, in Randolph, has done commercial lending for about a decade, and this fall will make its first SBA loans, according to Orlando Callegari, senior business lender.

“We see the opportunity, especially now that pockets of the economy are opening up” in retail, housing investment and small business. He said SBA loans, because they are guaranteed at least 75 percent by the federal government, provide an avenue of liquidity for small businesses that emerged from the recession without a strong enough credit rating to get traditional bank financing.