published Thursday, February 9th, 2012

U.S. Small Business Administration pushes loan deal

  • photo
    Walter Perry III, district director for the U.S. Small Business Administration
    Photo by Randall Higgins /Chattanooga Times Free Press.

Dollar bill in hand, U.S. Small Business Administration District Director Walter Perry lifted the microphone to his mouth as more than 40 regional bankers looked on.

"Let's talk about deals," Perry said, waving the bill.

Perry wants banks to increase their use of the federal agency's flagship product, the government-guaranteed small business loan. Through the program, the U.S. Treasury guarantees up to 90 percent of the loans to small businesses, reducing risk for bankers.

That's a big plus in an environment where most bankers say regulators have tightened the rules for making loans after the financial panic of 2008.

Although the SBA process has been lengthy and paperwork-intensive in years past, Perry said that the agency has streamlined loan applications by launching an online site, which he says 80 percent of banks now use.

"You used to have a big stack of papers that you'd have to FedEx, but the paperwork requirements have been simplified," he said. "This is a new day."

Now, he's hoping that local banks will step up to the plate in Chattanooga, and make more of the loans that Perry says sustain new business creation.

A number of Chattanooga-area lenders already work hard to sustain the program, including Brightbridge, Cornerstone, Regions and Suntrust. A few, like Cohutta Banking Co, Bank of America, FSG Bank, BB&T and several credit unions sent representatives to hear Perry pitch the program, even though they loaned less than $1 million through the SBA program in 2011.

Still, the top 10 SBA lenders originated almost 60 loans worth $37 million to small businesses in the Chattanooga area, when taken together.

But a number of out-of-town banks are swooping in to make loans that could otherwise be made locally, Perry said.

"There are some deals that are happening in Chattanooga, but they're going out of state," Perry said.

Joe Guthrie, whose Chattanooga-based Brightbridge was the No. 1 lender in Hamilton County in the fiscal year ending Sept. 30, said the trick to making loans in a time of economic uncertainty is being flexible.

"It's been a rough three years on everybody, but we try to be creative," Guthrie said. "We still look at collateral, but we also look at the character of the borrower."

That's the luxury that SBA loans provide, Perry said.

"They're dealing with someone else's money, so they appreciate that the risk is mitigated," he said. "The government guarantees it."

about Ellis Smith...

Ellis Smith joined the Chattanooga Times Free Press in January 2010 as a business reporter. His beat includes the flooring industry, Chattem, Unum, Krystal, the automobile market, real estate and technology. Ellis is from Marietta, Ga., and has a bachelor’s degree in mass communication at the University of West Georgia. He previously worked at UTV-13 News, Carrollton, Ga., as a producer; at the The West Georgian, Carrollton, Ga., as editor; and at the Times-Georgian, Carrollton, ...

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