News Column

SBA Administrator talks to community bankers about new programs

August 20, 2014

By Jessica Holdman, The Bismarck Tribune, N.D.

Aug. 20--Small Business Administration officials highlighted money-saving program changes at a gathering of community bankers in Bismarck this week.

As the nation recovers from recession, larger loans have gained popularity but smaller loan rates have lagged, said Matt Varilek, regional administrator for SBA Region VIII. He said, previously, those smaller loans had been more widely used by start-ups and businesses in rural areas.

In an effort to promote the use of smaller loans, SBA has waived fees on its loan guarantees for loans less than $150,000. The fees had typically been passed on to borrowers. Without them, borrowers can save up to $2,000.

Since the fee elimination, Independent Community Banks of North Dakota Vice President Wendy Ruud said more community bankers are taking advantage of the program when making small loans. She said ICBND invited Varilek to the organization's 47th annual convention Tuesday to educate more bankers about the program changes.

"They (SBA) work with our community bankers a lot," Ruud said. "It's another go-to place for them (bankers)."

Ruud said many bankers may already know about SBA program changes but some may not. The presentation is part of ICBND's shift of focus to education at its annual event as its organization grows.

In fiscal year 2013, SBA invested $29 billion nationwide in loan guarantees, Varilek said. The agency invested $95 million in North Dakota. Of that money lent out, there has been an uptick in the number of small loans since the fee elimination.

Success story

Varilek offered Double M Helicopters of Mandan as a local success story. He said the helicopter charter business used an SBA loan guarantee to purchase a helicopter and get started in fiscal year 2011.

According to the company's website, Double M now offers oil field transportation support, aerial photography, helicopter utility service, aerial firefighting, pipeline and powerline inspection and various charter flights.

Varilek said SBA has been able to waive the fees because most of the loans it guarantees do not go into default.

Varilek also told the 410 community bankers in attendance about Small Business Investment Companies. SBICs allow banks to be investors in venture capital funds.

SBICs are licensed with the SBA and the agency matches private capital raised at a ratio of 2 to 1. An SBIC that raises $20 million will be given an additional $40 million to invest, giving investors extra profits.

Varilek said SBIC use has been limited in North Dakota and he wanted to make community bankers more aware of the opportunity.


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Source: Bismarck Tribune (ND)

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