usiness lending up 136 percent from last year
WILMINGTON, DE – U.S. Small Business Administration (SBA) lending in Delaware increased significantly in the first quarter of Fiscal Year 2010 ending December 31, 2009. Compared to the first quarter of FY 2009, the total number of SBA loans increased 52 percent and the dollar volume of lending increased 136 percent from $3 million to $7.1 million.
The increase in the number of loans offers no conclusive evidence of a fundamental shift in the lending environment, but is not unique to Delaware and may be reflective of the impact economic stimulus efforts are having in the marketplace. In Delaware, year-to-year data shows that SBA lending in the number of loans and the dollar amount contracted 64 percent and 39 percent, respectively, in FY 2009 from 2008 levels. During that period, the number and value of loans dropped from 53 loans valued at $4.9 million to 19 loans valued at $3 million.
The American Recovery & Reinvestment Act of 2009 (ARRA) signed by President Obama on February 17, 2009, provided broad reaching assistance to small businesses, including an increase in the SBA guarantee on most loans up to 90 percent from the previous 75-85 percent and the elimination of guaranty fees, resulting in substantial savings for small business borrowers.
Since the Act was signed, SBA nationally has supported more than $19 billion in lending to small businesses through its two largest loan programs and seen its average weekly dollar volume increase by more than 75 percent in comparison to the weeks before the Recovery Act. In Delaware, SBA has approved 96 loans for a total of $25.7 million since the Act was implemented and seen an increase of 45 percent in dollar volume compared to pre-Recovery Act levels.
“We think this is a good sign for the Delaware economy and hope that the trend continues in the coming months,” said Jayne Armstrong, district director of the SBA’s Delaware District Office. “We saw a slight increase in lending near the end of the fourth quarter of last fiscal year. The increased activity in this first quarter of FY2010 builds on that trend and certainly affirms that money remains available to qualified borrowers.”
To further assist small businesses, President Obama last month extended the ARRA fee waiver and loan guarantee provisions. Fee elimination on SBA loans means decreased costs to the small business borrower, while maintenance of the 90 percent federal guarantee to banks means a continued reduction in risk to SBA lenders.
The benefit of SBA loans on the Delaware economy can be measured by the number of jobs created or saved by the influx of much needed capital to small businesses. In this first quarter of 2010, 261 jobs were created or retained which represents a significant benefit to the people of Delaware.
A special 100-percent guaranteed, deferred-payment loan program up to $35,000 created under ARRA, known as America’s Recovery Act (ARC), has been used by eight firms in Delaware since June, putting an additional $ 271,000 into the hands of small business owners.
Among SBA lenders, Wells Fargo, TD Bank, and Borrego Springs Bank reported substantial increases in lending over the prior year. Wilmington Trust continued as the top SBA lender in terms of the number of loans with six, and Delaware Community Development Corporation, a SBA 504 program lender, led the state for the largest dollar amount with a total over $1.4 million.