Bank leaders discuss the benefits of small business lending products from the US Small Business Administration and the New Jersey Bureau of Economic Development.
Anthony Vecchione Contributing Writer, Nov 10, 2022
New Jersey banks see stronger demand for US Small Business Administration (SBA) and New Jersey Economic Development Authority (NJEDA) loans compared to the height of the COVID-19 pandemic.
“In the wake of COVID, we pivoted to Paycheck Protection Program loans for several years,” said Chris Kneer, senior vice president division manager of SBA Lending at Valley Bank. “We’ve got it on, so back to building his 7(a) program at the SBA.
Industry experts say participation in the SBA and NJEDA loan programs will benefit banks.
Kneer argues that participating in SBA-backed loans is an opportunity for banks to provide capital in ways that differ from standard lending products.
“It’s all about making capital accessible to borrowers and prospects,” he says. “these are [businesses] For some reason, you are not a traditional customer or are not eligible for traditional financing. “
Thomas Pretty, Head of SBA Lending at TD Bank, commented: [our] Unlike many SBA lenders, the bank offers longer terms. [we] We can offer long-term fixed interest rates that are particularly desirable in an environment of rising interest rates. “
SBA’s 7(a) loan program includes financial assistance for small businesses with special requirements. This is a good option when real estate is part of a business purchase, but loans can also be used to: Short-term and long-term working capital: refinancing current business debt. Or purchase furniture, fixtures and fittings.
The maximum loan amount for a 7(a) loan is $5 million, according to SBA. The main eligibility factors are based on what the business does to receive income, credit history, and where the business operates.
Guiseppe Mastroeli, executive vice president and business banking market manager at M&T Bank, said the SBA program will allow M&T to help more small businesses because the SBA guarantee reduces risk. “By leveraging SBA and partnering with local Community Development Centers (CDCs), we can provide more financing to small businesses in the communities where we live and serve,” he says.
According to Pretty, SBA 7(a) loans are a great way to buy an existing business, start a business, purchase buildings and equipment, or refinance existing debt for a longer term and with a smaller down payment. Best way. Additionally, in 2023 he will not need his SBA origination fee on his SBA loans under $500,000, he said.
On the other hand, an SBA 504 loan is a great way to buy buildings and equipment for your business with a low down payment, up to 25 years amortization and terms, he continues.
Meanwhile, the Certified Development Companies (CDC)/504 Loan Program provides long-term, fixed-rate loans for key fixed assets that drive business growth and job creation.
Valley’s Kneer said participating in these programs means borrowers have access to funds they may not yet need to grow their businesses.
“It also gives us the opportunity to build relationships with good banks,” he continues. “Many of our customers start with an SBA loan and grow into a long-term relationship where they can qualify for traditional products in the future.”
Many of Valley’s SBA customers are new bank customers, he said. “This is an opportunity to tell them more about what we do, and the Valley is headquartered in New Jersey, so it’s a good fit.”
Martin P. Merrill, Market President, TD Bank, Central New Jersey. Low interest rates and long term. Without SBA or his NJEDA programs, some business owners may not have been able to obtain traditional loans. “
NJEDA’s Premier Lender Program enables participating banks to make loans at higher loan amounts. [ratios] With NJEDA participation, standard loan products are not allowed in certain projects.
Under the Premier Lender Program, NJEDA can offer the following loan participations/guarantees and lines of credit.
- Up to 50% of the bank loan amount for fixed asset loans. Maximum participation in NJEDA is $2,000,000. Maximum NJEDA Guarantee of $1,500,000. Total NJEDA exposure not to exceed $2,750,000.
- For working capital loans, up to 50% of the bank loan amount. Maximum participation in NJEDA is $750,000. Maximum NJEDA Guarantee of $1,500,000. Total NJEDA exposure not to exceed $2,250,000.
- Guarantee of up to 50% of your bank credit limit. not exceed $750,000
Valley’s Kneer says 2022 will be a good year with more lending. “We are keeping an eye on where the economy is headed and making sure we are discussing various challenges with our borrowers,” he says.
Looking ahead, New Jersey banks expect positive lending activity next year.
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