clock menu more-arrow no yes

Filed under:

SBA loan use is booming among businesses in Utah

For several years, Utah has ranked high in the percentage of loans guarantees from the Small Business Administration in relation to the number of businesses in the state. Now it's No. 1.

Utah's SBA office ranks first in the country so far this fiscal year, according to Stan Nakano, SBA district director for the state. Last fiscal year, which ended Sept. 30, 1997, it ranked fifth.In the past fiscal year, Nakano and his employees made 655 loan guarantees worth $155 million to Utah businesses, which he said has had a big impact on the state's economy.

Those loans were made under Section 504 of the Small Business Act. The money is used to construct or purchase a building and purchase equipment for the business.

Nakano said a money lender puts up 50 percent of the loan; a certified development company puts up 40 percent, with the SBA participating through a guarantee on this part of the loan; and the borrower puts up 10 percent.

He said this type of loan is popular with financial lenders because they have first lien on the business if there is a default. That means the lender will have first dibs on any assets from the default before anyone else.

Although he admits he isn't an economist, Nakano expects the current interest in SBA-guaranteed loans to last through the hosting of the 2002 Winter Olympic Games.

Nakano said 21 percent of last fiscal year's loans were made under the low documentation program (loans under $100,000) that require a one-page application.

Eighteen percent of the loans went to women business owners, which is higher than the goal of 10 percent to 15 percent his office set several years ago. And lending to minority-owned businesses increased 28 percent in the fiscal year. "It is pleasing for us to reach out to under-served people, women, minorities and veterans," he said.

In addition to ranking high in loans, Nakano is proud of other programs in which his office participates.

For example, 7,000 people were trained or counseled in the Small Business Development Centers, which are a partnership between SBA, the Utah Department of Community and Economic Development and Salt Lake Community College.

Another 2,300 people used the facilities at the Business Information Center, which is a partnership between SBA, the Service Corps of Retired Executives and the Utah Technology Finance Corp.

The SBA is a partner with the Salt Lake Area Chamber of Commerce in the new Women's Business Center that is supporting the growth of women-owned businesses in Utah.

Another of SBA's programs deals with minorities. In the past fiscal year minority-owned businesses received $23 million in government contracts and $12 million in loans that were used for working capital, equipment purchases and construction or leasing of buildings.

Finally, the SBA is emphasizing a rural development program because some of its loans went to rural counties. During the past fiscal year, SBA officials went to Fillmore and held a seminar when all SBA programs were discussed. Nakano said all Utah businesses are encouraged to visit the agency's Web page at (www.sba.gov), or you can call 1-800-827-5722.