Lending to small businesses up in East Tennessee
By G. Alan Sieve | For Areawide Development Corporation
“Small business is where the new jobs are going to come from,” said Terry Bobrowski, executive vice president of Areawide Development Corporation, at the nonprofit firm’s recent annual meeting at Egwani Farms Golf Course in Rockford.
He, Don Woods, ADC director, and Walter Perry, U.S. Small Business Administration district director from Nashville, all noted that SBA lending to small businesses is up in Tennessee, which will enable them to create more jobs.
“ADC is certainly doing its part,” Bobrowski said. Based in Alcoa, Areawide markets and processes U.S. Small Business Administration Section 504 loans to small businesses in partnership with banks to help finance capital projects.
Loan numbers tell the story. Woods noted in his report to the ADC membership that 15 new SBA loans had been approved in fiscal 2011-2012, which ended Sunday. They comprise $18.1 million in volume, which is up from 13 loans comprising $10 million last year.
He added another 15 loans worth $15.5 million that had been previously approved received funding and were closed during the year, while another 19 loans worth $25 million were in various stages of production.
“From a loan standpoint, it’s been a very productive year,” he said.
Loans up statewide
“Areawide is the second highest (SBA) lender in the state of Tennessee,” noted Perry in his remarks. It was only two loans and $2 million in volume behind Brightbridge Inc., Chattanooga.
Mid-Cumberland Development Corporation, Nashville, was third among the eight certified development companies marketing SBA loans in Tennessee. It had eight loans, totaling $4.3 million in volume.
All combined, the eight CDCs produced 54 SBA loans statewide in FY2012 with a combined total of $50 million loaned, which is up from 38 loans worth $30 million in FY2011, Perry said.
“We’ve got good news to report,” he said.
The types of small business most frequently served are hotels and motels, followed by doctors’ offices, restaurants and car washes, he said.
Low rates credited
Woods credited low interest rates for ADC’s level of borrowing activity.
“Interest rates right now are very competitive,” he said. “That’s one of the reasons why our volume has increased.”
Bobrowski added that during it’s nearly 30 years of operation, ADC has had “a tremendous impact on the economy,” making 264 SBA loans worth $117 million, which leveraged $290 million in private capital and created 5,000 new jobs over that period. Three other loan programs administered by Areawide have produced 85 loans worth $9 million and have produced another 1,295 new jobs, he added.
“I know what you’re doing, and I value what you’re doing,” added State Sen. Doug Overbey, Maryville, who attended the meeting and was asked to say a few words, “because all of us need to be doing everything we can each and every day to support businesses, especially small and startup businesses.”
He pointed to the TNInvestco program, which he’d helped sponsor and which has been the subject of criticism recently, as a case in point.
“It’s a very successful program,” he asserted. In effect for two years and funded by the sale of life insurance premium tax credits, the state-sponsored venture capital funds created has invested $65 million thus far, and has raised $1.50 in private capital for each dollar of state capital invested, he noted.
He acknowledged that critics have argued that those firms receiving TNInvestco funding have only created or retained about 1,000 jobs thus far, but these are firms that may only be creating five to seven jobs at a time, he said.
“This is supporting small and start-up businesses that you hope will go on to expand.”