Small-business lending up in Southern California -- until the money ran out
Government-backed loans to small businesses were way up in Southern California over much of the last year, according to the Small Business Administration.
During the nine-month period that ended June 30, lenders made 1,725 loans to small businesses in Los Angeles, Ventura and Santa Barbara counties, about 50% more than in the same period a year earlier. The dollar volume of those loans nearly doubled compared with the year-earlier period, to $850.8 million.
The top SBA lender in the region during that period was Wells Fargo Bank, followed by Center Bank, JPMorgan Chase Bank, Superior Financial Group and CDC Small Business Finance Corp.
The increase highlights the success of new loan programs associated with the economic stimulus. These programs allow banks to accept lower down payments and waive hefty fees that normally go along with SBA loans. In addition, the government guarantees SBA loans up to 90% of their value, meaning that banks have far less risk when extending credit to small businesses.
In May, however, funding ran out for the new programs, and plans to extend them have stalled in Congress. The House approved an extension, but the Senate is expected to adjourn for its August recess without doing so.
After the programs ended, SBA loans to small businesses dropped by about two-thirds nationwide.
-- Sharon Bernstein