SBA loans double; banks thank economy

An improving economy and flood-relief efforts contributed to a 108 percent increase in Small Business Administration lending in Northern Colorado in fiscal 2013, with total SBA loans jumping to $68 million from $32.5 million in fiscal 2012.

Northern Colorado’s increase dwarfed the increase seen on the state level, even though Colorado saw a record amount of SBA loans in fiscal 2013. The federal government’s fiscal year begins Oct. 1.

Statewide, SBA lending increased 11.5 percent from the previous year to $622.5 million.

In Larimer and Weld counties, 2013 loan levels also were much higher than even those levels reached in 2011, when incentives offered by the federal government pushed SBA lending up to $59 million.

The SBA offered several programs to help businesses and residents affected by September’s historic flooding, which contributed to the increase both locally and statewide, according to Mark Bower, chief financial officer of Home State Bank.

After the flood, the SBA opened disaster centers in Estes Park, Longmont, Loveland and Greeley, providing counseling and low-interest loan programs to those hurt by flooding. In the last three weeks of September following the floods, nearing the end of the fiscal year, a rush of residents and businesses applied for SBA loans.

Business loans were available for as low as 4 percent, for up to $2 million for the repair or replacement of real estate, inventory, machinery and equipment. Nonprofit organizations were able to get loans for as low as 2.8 percent.

The SBA also offers economic-injury disaster loans for those who did not suffer physical damage but who lost money because of the floods.

In Larimer County, the SBA provided $16 million to help pay for disaster losses, including residential, personal property, businesses and private nonprofit organizations, according to a tally by the Federal Emergency Management Administration.

Improvements in the economy also contributed to the increase, said Mark Driscoll, chief executive of First National Bank, which loaned $1.3 million in SBA 7(a) money to businesses in Colorado.

“I’m not surprised,” Driscoll said. “That reflects an improving economy and business confidence.”

Standard SBA loans come in two different types: 7(a) and 504. SBA 7(a) loans provide working capital, while 504 loans help businesses acquire real estate and major fixed assets.

Typically, businesses use just one type of SBA loan, but in some cases, a 504 loan is used to acquire or build real estate and then a 7(a) loan is used to provide working capital for other expenses.

This tactic was used to open Freddy’s Frozen Custard and Steakburgers in Loveland, according to Keith Dickelman of Home State Bank, who helped Freddy’s owner Mark Siffring put together the financing package.

Using an SBA loan instead of a conventional loan enabled Freddy’s to move forward with its business plan without injecting as much capital into the business up front, Dickelman said. SBA loans can provide higher ratios of financing than can traditional loans because the debt burden is carried by both the bank and the federal government.

Because Siffring was able to keep more cash in his pocket, he has been able to formulate a growth strategy that includes two more locations in Northern Colorado, specifically in the Loveland and Fort Collins area.

The extra capital he was able to retain makes that growth possible, he said.

“Without SBA, we wouldn’t be able to grow as fast as we want,” Siffring said.

Many businesses shy away from SBA loans because they require more paperwork and a different approval process, said Eric Adams, market president for Wells Fargo’s Larimer County District.

“There’s misunderstanding in the market about SBA,” he said. Wells Fargo was the largest SBA lender in the state in fiscal 2013, with $84.1 million in 7(a) loan production, which Adams said was an increase of about 7 percent over the previous year.

Molly Armbrister covers real estate, banking and health care for the Northern Colorado Business Report. She can be reached at 970-232-3139, or

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