Small businesses get help

By Dick Hughes  

JANUARY 21, 2010 10:28 a.m. (0)

Entering the third year of being battered by the recession, The South Financial Group took steps to build a neglected business segment.

The company has created a 19-person department to become a bigger player in Small Business Administration loan programs in the Carolinas and Florida.

Its banking subsidiary, Carolina First and Merchant Bank, as it is called in Florida, became a preferred SBA lender, meaning it can write SBA loans without going through the federal agency.

Most national banks also are preferred lenders. The Bank of Travelers Rest, historically a major SBA lender, is one of the few community banks with the status.

No Spartanburg-based bank is listed as having participated in SBA programs in the past year, although Travelers Rest, regional banks such as Regions and some specialty national firms wrote loans for Spartanburg businesses.

In the last three months of 2009, Bank of Travelers Rest wrote more than $2.3 million in SBA loans, the fifth largest volume in the state and far more than larger banks such as Bank of America, BB&T, SunTrust and Carolina First, according to SBA accounting.

Elliott Cooper, district director for SBA in Columbia, said Travelers Rest is active in a special program to give relief to small businesses “experiencing immediate financial hardship” with existing loans.

Called ARC, the SBA loaned up to $35,000 to make interest and principal payments for up to six months.

Cooper said Travelers Rest “probably has done more ARC loans than anyone else. The big banks opted not to come into the program.”

The depth of South Financial’s commitment to SBA lending was viewed as a bright development for a bank that has suffered two years of losses, stock depreciation and dilution, capital depletion and staffing cutbacks.

Creating the division is a tangible demonstration of the company’s resolve, as H. Lynn Harton, president and chief executive officer, has said, to come out of the real estate and credit meltdown with tighter focus on building customer relationships with multiple banking services.

“We can’t change the past, but what I can say is that getting preferred lending status, bringing me here, and the commitment to 18 more full-time equivalent jobs is something I haven’t seen any other bank do in this region,” said Richard W. Bradshaw, who joined TSFG in August to build the SBA division.

He expects to write more SBA loans in the second quarter of 2010 than Carolina First and Mercantile Bank did in TSFG’s 23-year history.

“The existing portfolio, which also includes Florida and Mercantile Bank – what we have on the books today – is slightly under $10 million for SBA lending,” he said. He said he expects the third and four quarters to show the same or better results.

He said the SBA business “is important to Carolina First because Carolina First is a business bank and definitely has a focus on small businesses. By utilizing the SBA program, we are able to give our clients a loan structure that would be beyond what you typically would do in a commercial unguaranteed program.”

For example, he said, a business borrowing $400,000 for new equipment at 6 percent on a conventional five-year note would pay $92,800 annually in principal and interest but $40,500 annually on a 15-year SBA loan.

“For a small business, $52,000 a year is a big deal. That kind of cash flow enables you to hire two more people. That’s really the target of the program – to enhance their cash flow.”

Of the 19 employees, including Bradshaw, 18 are new hires and one is a transfer from another department. Most have years of experience in SBA lending, Bradshaw said. “These are good-paying jobs.”

Nine are SBA loan officers spread throughout the Carolinas and Florida, and 10 are supervisory and back office workers in Greenville.

Cooper welcomed TSFG’s aggressive move into SBA lending saying he expects Carolina First, as one of the state’s larger banks, to boost overall SBA lending statewide.

“This is a very, very big commitment on the part of Carolina First,” Cooper said. “I know some of the people they’ve hired, and they will hit the ground running.”

Bradshaw said the timing “happens to be fantastic” because of relaxed SBA terms to stimulate lending to small businesses and create jobs.

Under the American Recovery and Reinvestment Act, the SBA temporarily waived loan fees, typically about 3 percent of the loan amount; increased the government guarantee from 75 to 90 percent for most loans and doubled eligibility to businesses of annual revenues of $20 million.

Money for the easier terms ran out in December; Congress refunded the program until Feb. 28 and is considering keeping the fee deferral and 90-percent guarantee in place through 2010.

In joining TSFG, Bradshaw moved to Greenville from Atlanta where, as president of UPS Capital Business Credit, he tripled SBA loan volume from the 45th largest to the 10th largest in the nation.

“I’ve been living and breathing this for 15 years,” he said.

Comments

Add New

Leave a Comment
Comments are moderated and may not be posted immediately.
Name:
Email:	do not notifynotify
Title:
	Please input the anti-spam code that you can read in the image.

3.26 Copyright (C) 2008 Compojoom.com / Copyright (C) 2007 Alain Georgette / Copyright (C) 2006 Frantisek Hliva. All rights reserved."