Loans for Small Business

By Chad Halcom
Crain's Detroit Business
Oakland County officials hope waived fees, greater latitude in refinancing, merging business debt and other new provisions of the federal stimulus package could curb a sharp decline in local small business assistance in recent months. Activity in the Oakland County Business Finance Corp. fiscal 2009 is off nearly two-thirds from this same time during the previous fiscal year, said Catherine Rasegan, loan and finance officer for Oakland County Planning and Economic Development Services. That’s comparable to a decline of more than 60 percent in loan assistance nationwide through the U.S. Small Business Administration, and more than 65 percent decline in Michigan. Rasegan and Oakland County Executive L. Brooks Patterson both addressed a crowd of 200 or so attendees Wednesday at a “Small Business Financing Forum” in Birmingham, on changes to SBA lending and local business development incentives under the American Recovery and Reinvestment Act. The OCBFC administers SBA loans to supplement private financing for real and personal property improvements to businesses. A similar local authority, the Oakland County Economic Development Corp., helps sell bonds to finance construction and building improvements that will add or retain jobs at local businesses. In fiscal 2007 the OCBFC approved $39.8 million in loan assistance to 28 businesses, and Rasegan said 2008 fiscal numbers were fairly similar. But this year, the agency has approved only about three loans in the past quarter or so, she said. “There’s still a lack of the private financing to complete those loans, even with SBA assistance, and in many cases you also have the borrower deciding it’s not a time due to the market or the rates they can get,” Rasegan said. The SBA loan assistance approved by OCBFC typically covers just part of a business construction or expansion project; up to 50 percent of the project cost must still be covered by traditional bank financing — a tough sell to borrowers and lenders alike in the current financial market. But Rasegan said the interest level in both OCBFC and OCEDC assistance has climbed again, since the changes enacted after ARRA was signed by President Obama Feb. 17. “We’ve already seen a greater interest in the form of queries, and more applications have been submitted in the past month (since the ARRA was signed) than in the entire preceding quarter. It’s hard to read too much into that since that quarter is usually a slow period,” she said. “But if the (post-stimulus) rate of application continues, it could climb all the way back to a normal activity year.”