Despite SBA's Glitches, SFCU Ready To Lend
Stanford Federal Credit Union still is in the SBA loan business, despite the U.S. Small Business Administration's money troubles.
Just a little over a month after Stanford FCU announced it had been approved by the SBA to provide government-guaranteed, business-related loans to its members, the SBA announced it was terminating its 7(a) loan program, due to a lack of funding. Later, the SBA was able to resume the program, although the loan guarantee limit was lowered to $750,000 from $2 million.
Mark Lovewell, chief financial officer for Stanford Federal, told The Credit Union Journal he was not surprised by the disruption to the 7(a) program, because the SBA for months had been moving towards smaller credits.
"Steven Weiler, our director of business banking services, and I have spoken with the regional director of the SBA in the [San Francisco] Bay Area. He said there is more pent-up demand than the SBA can meet. The SBA is going to have to figure out a way to make its budget last longer than the projected nine to 10 months," he observed.
Lovewell said the credit union's partnership with the SBA still is expected to generate a good response within the "Stanford Community"- SFCU's term for the faculty, staff, students and alumni of the university that make up its field of membership. According to Lovewell, SFCU has a greater focus on the SBA's 504 program, which allows small business owners to purchase commercial and industrial buildings for as little as 10% down.
Under the terms of the 504 program, the participating financial institution provides 50% of the purchase price as a first-position trust deed. The SBA then supplies a second trust deed for 40%. "We think this will be a viable product with our many members who are investors in commercial real estate and who own businesses," he said.