Wednesday, October 28, 1998

SBA pledges more, faster, financing for some businesses

By SCOTT SCHOLTEN

Staff Writer

Some small businesses may have an easier time quickly accessing more financing, thanks to modifications in government programs.

Two loan programs backed by the U.S. Small Business Administration are promising higher financing for those who qualify and fast application processing for those who apply, said Armando Garcia, chief of finance with the U.S. Small Business Administration in Lubbock.

Application processing should not take longer than 36 hours, Garcia said.

The SBA also raised limits on the two types of government-backed financing, Garcia said.

The SBA raised ceilings on its LowDoc and SBA Express loans from $100,000 to $150,000, Garcia said.

Garcia said the loan program is designed for groups traditionally "under served" by financiers. Those groups include Blacks, Hispanics, Asians and women, Garcia said.

Garcia said the bar on how credit worthy an applicant is will not be lowered by the program.

"Credit standards remain the same," Garcia said. "We're not going to lower our credit standards and banks aren't going to lower their credit standards."

Instead of targeting the economically disadvantaged, the SBA-backed plan will support those who, by traditional lending standards, lack collateral or are not putting enough equity into their small business ideas, Garcia said.

The asset-to-financing ratio will not be as high these SBA-backed loans as for non-SBA-backed loans, Garcia said.

Tom Mann, director of economic development at the West Central Texas Council of Governments, said there are two other ways the SBA-backed loans will be helpful for borrowers.

Mann said banks might have ordinarily required higher interest rates of the borrower.

Also, the amortization schedules may last longer if the loans are SBA-backed, increasing the business's cash flow, Mann said.

The SBA-backed loans will help banks meet their Community Reinvestment Act requirements, Garcia said.

For more information on the two loan programs, call 800-676-1005.

Scott Scholten may be contacted at (915) 676-6737, or scholtens@abinews.com.