SBA loans add up for small firms

In a state where virtually every business may be considered a small business, the $76.4 million in Small Business Administration loans approved last year was a direct boon to 421 separate interests.

That's the number of SBA loans made across Montana in fiscal year 2007, which ended Sept. 30.

Kalispell-based Glacier Bancorp Inc. is near the top of the list statewide for one of the SBA's most popular loan programs. The holding company for Glacier Bank gave 76 loans under the SBA's 7(a) Guaranty Loan Program, which provides short- or long-term financing for small business start-up or expansion needs.

Those 76 loans totaled $6.56 million, ranking Glacier Bancorp behind only two others in the state. Mountain West Financial Corporation approved $9.26 million in loans and Yellowstone Holding Company approved $6.64 million.

Locally, nearly 60 percent of Glacier Bank's loan money from January through September this year went to small businesses.

"Montana is a state of small businesses, and commercial lending is a big part of our business," Dennis Beams said. As executive vice president and chief credit officer for Glacier Bank in Kalispell, Beams oversees loan activity for the local bank branches.

"Sixty-three percent of our loan portfolio is in business loans, so we want to have all the tools possible - the SBA programs, the USDA Business and Industry program, CDBG's." The latter refers to Community Development Block Grants administered through a municipal government.

Beams said Glacier typically uses government programs to help a business when there's not enough collateral but there is a strong cash flow and a solid business that justifies a longer-term loan.

"Another reason," he added, "on some larger projects it lets us give longer terms and fixed rates. The 504 [SBA loan program] will allow up to a 90 percent loan."

While the SBA's 7(a) loan program is targeted at small business start-ups and initial equipment, its 504 Certified Development Co. program provides long-term, fixed-rate financing for land, buildings and equipment.

In a 504 loan, the development company provides up to 40 percent of the financing, a bank or other lender provides 50 percent, and the business owner comes up with no less than 10 percent.

The 504 loans are handled by certified development companies, nonprofit organizations sponsored by either private interests or by state and local governments. The development company organizes the financial package, completes the paperwork and services the loan.

Four certified development companies operated in Montana in the fiscal year just ended:

. Montana Community Finance Corporation approved 22 loans for a total of $7.19 million,

. Big Sky Economic Development Corporation approved 12 loans for $5.63 million,

. High Plains Financial Inc., approved three loans for $3.01 million,

. Frontier Certified Development Co. approved one loan for $565,000.

Montana Community Finance Corporation - which serves Flathead, Broadwater, Cascade, Fergus, Gallatin, Lewis and Clark, Ravalli, Richland and Yellowstone - reported that its loan volume represented 57 percent of the state's total 504 loan activity. Its customers said the loans would create 156 new jobs.

Several other lenders with a Flathead Valley presence played a significant part in the 7(a) loan program over the past fiscal year:

. First Interstate Bancsystem Inc. made nine loans for $1.4 million.

. First National Bancorp Inc. granted four loans for $441,900.

. Flathead Holding Company of Bigfork made one loan of $275,000.

. Freedom Bancorporation made one loan of $1.88 million.

In the fiscal year just ended, Montana guaranteed 383 loans under the 7(a) program in Montana, awarding $60 million.

Under the 504 loan program, 38 loans were approved for $16.4 million.

It's a critical piece in the financial health of Flathead County.

Countywide, banks loaned $12.57 million. In the sheer dollar volumes of loans, that put Flathead behind only Yellowstone County, at $18.16 million, and Gallatin County, at $12.76 million.

In the number of loans, Flathead's 46 loans ranked fourth - behind Yellowstone at 123, Gallatin at 51, and Lewis and Clark at 48 loans (for $4.55 million).

The SBA financed 165 new businesses for $29.79 million across Montana last year:

. Restaurants, specialty trade contractors and landscaping service businesses were most frequently financed.

. Women-owned businesses received 82 loans totaling $10.38 million.

. Veteran-owned businesses received 62 loans for $11.06 million.

. Minority-owned businesses received 31 loans for $6.59 million.

Reporter Nancy Kimball can be reached at 758-4483 or by e-mail at nkimball@dailyinterlake.com