The U.S. Small Business Administration in Colorado experienced a sharp drop in lending volumes in the past year because of the credit crunch and the recession.
The SBA’s Colorado District office approved 1,138 loans valued at $330 million in the fiscal year ended Sept. 30. During the previous fiscal year, the SBA in Colorado approved 2,256 loans worth $556 million.
The number of loans is off by nearly half, while the dollar volume is down 41 percent in Colorado. Nationwide, the number of SBA loans fell 35 percent and the dollar volume was down 27 percent over the past 12 months.
“Basically, banks are very cautious about who they are going to lend to,” said China Carll, marketing manager at Colorado Lending Source.
The SBA provides a guarantee to lenders participating in its programs, but lenders must still approve the loans by their credit standards.
The retail, restaurant and service startups that tend to rely more heavily on SBA lending become scarcer during recessions, and expansions less common.
Also, lenders tend to view those borrowing to compensate for falling sales as poor credit risks.
The American Recovery Capital Loan program, designed to help out creditworthy but struggling businesses, saw only 30 loans worth $928,000 approved in Colorado since June.
“Based on discussions with small- business owners, access to capital remains the No. 1 obstacle to recovery today,” Greg Lopez, the SBA’s Colorado District director, said in a statement.
Banks that bundled their SBA loans and sold them as securities, similar to what was done with mortgages, have seen those markets dry up.
“Our ability to lend hasn’t been reliant on that secondary market,” said Steve Saxson, Wells Fargo’s vice president for small-business lending in Colorado.
That might explain why the state’s largest SBA lender in volume saw a smaller percentage decline than that recorded statewide. Wells Fargo made 170 SBA loans worth $49.1 million in the past 12 months, compared with 263 loans worth $63.7 million in the previous fiscal year.
Aldo Svaldi: 303-954-1410 or asvaldi@denverpost.com
