The sale of ITT Small Business Finance to General Electric Capital Corp. has suddenly turned St. Louis into a new hub for lending backed by the Small Business Administration.

With the March 31 sale of St. Louis-based ITT, both GE Capital and Salt Lake City-based Zions Bancorp. announced they would operate their national SBA lending activities out of St. Louis.

When GE Capital inked the deal, ITT was one of the nation's largest SBA lenders. In the two years ended Sept. 30, the company originated a total of $217.9 million in SBA loans. In the five years from 1990 through 1994, the company made 2,706 loans worth more than $511.1 million.

GE Capital's acquisition also netted ITT's existing portfolio of SBA loans. At Dec. 31, ITT reported that its servicing portfolio handled nearly $700 million in guaranteed and unguaranteed credits.

The sale of the SBA lending unit was part of ITT's announced plans to shed large chunks of its financial-services-related assets. Earlier this week, the company said it would sell a portfolio of home equity loans to Transamerica Financial Services for $1.03 billion.

What GE Capital did not get was ITT Small Business Finance's former president and founder, Tony Feraro. He was lured away by Zions to start a new nationwide operation focusing on making loans under the SBA's popular 7(a) program.

"I now have the opportunity to attempt to accomplish some of the same things we've done over the last 13 years, though I think we can do them in a much shorter time here," said Mr. Feraro.

As a senior vice president and head of the new Zions Small Business Finance, he will be charged with beefing up the bank's 7(a) loan volume, which amounted to $15.8 million last year and $14.8 million in 1993.

With more than $5 billion in assets, Zions intends to use the St. Louis operation to propel its 7(a) lending efforts nationwide. Currently, the company's lead bank, Zions First National Bank of Salt Lake City, has operations in Utah, Arizona, and Nevada.

"St. Louis is certainly well situated for us because we would anticipate generating business throughout the country," said John D'Arcy, a senior vice president in charge of loan origination for Zions. "The real focus for Tony is to do what he has been doing for the last 13 years, and that is to generate loans."

Besides its work in the 7(a) program, Zions is one of the leading users of the agency's 504 real estate loan program. Through a contract with the National Association of Development Companies, Zions has created a nationwide network that generated much of Zions' $26.7 million in 504 originations last year.

The volume generated under this contract gave the bank's investment division a large enough supply of loans to privately place the first securitized pool of 504 loans in the program's history. The March sale of the $45 million pool was placed with a group of institutional investors.

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