Lending company specializes in SBA loans

Business owners in Northern Colorado have an enormous asset in securing Small Business Administration-backed loans by a rather novel lending institution, Immito of Denver.

“We’re one of only 12 private lenders that are qualified to handle SBA loans,” said Emilio Vallejos, vice president of business development for the organization. “You’ve got to jump through a bunch of hoops to get that.”

Immito, Latin for “to launch or send forth,” was formed by The Local Initiatives Support Corp. in September of 2018 expressly to help fill a perceived gap in SBA funding. LISC itself was formed in 1979 —  mostly by a grant from the Ford Foundation — to create jobs in underinvested communities and has invested more than $20 billion since its inception and holds $14 billion in equity.

LISC put about $1 billion into Immito, with the sole objective of better serving SBA loan clients, Vallejos said. While a number of banking organizations generate SBA loans, only a few have large departments dedicated to the SBA loans.

“If they don’t do a lot of them, you could be two, three or four months down the line (on the loan application) and something comes up that prohibits it,” he said. “Not that there are not experienced SBA lenders out there. If you don’t pick us, pick someone who is experienced in SBA.”

The curious thing about SBA loans, which are backed by the federal agency, is that part of the qualification procedure is showing that the applicant is not eligible for conventional lending. The SBA guarantees up to 85 percent on loans of $150,000 and less, and up to 75 percent on loans greater than $150,000.

“They are intended to serve business owners who do not qualify for conventional loans,” Vallejos said. “That’s usually something like insufficient capital, personal credit, or (lack of) equity.”

What makes that even more curious to many business owners, he said, is that those factors can also be the reason a banking institution might decline on an SBA loan, as well. Vallejos pointed out that at many banks it’s the same loan committee that makes decisions on SBA loans that makes the decisions on conventional loans.

“Even the banks that are active in SBA lending — they just have a low risk tolerance,” he said. “It’s still the same loan department and loan committee. Even though they offer that SBA loan, their analysis hasn’t changed.”

That can often make getting through an SBA loan process a rather tall order for many small businesses owners, Vallejos said.

“For lots of small businesses it can be pretty tricky; it’s very much a niche and a specialty,” he said. “But we’re only doing SBA lending so that’s 100 percent of my day. In my past life, even as a senior lending officer, you spend a lot of time with a different hat on.
Immito is largely looking at “midstream” SBA loans, somewhere between $250,000 and up to $5 million. Vallejos said there are a number of micro-lenders at lower loan levels, but this particular level of funding is often where successful businesses find they cannot expand.

One recent example of an Immito client was a self-funded distillery that was looking to expand capacity and open a second facility. While profitable, and in business for three years, the owners had been turned down in a previous SBA application for lack of equity in the expansion.

Another client had also been in business for some time and wanted to move its retail business to a better location. That business was also turned down for lack of equity.

“It’s funny because by moving locations their lease is going to go down 65 percent, and it’s a better location for what they do. It’s going to make their business more profitable and expand their capacity,” Vallejos said.

Immito gears up for virus relief loans

With the federal government  looking to bump funding for the Small Business Administration lending to $50 billion and Colorado businesses now eligible under the SBA’s Economic Injury Disaster Loan Program, Immito is actively working on its programs to help business work through the COVID-19 emergency.”

“We have seen a huge increase in new clients as we are continuing to lend and work closely with local small businesses,” said Emilio Vallejos, vice president of business development for the organization. “If banks restrict their lending, it will be up to private lenders like us to fill the void. We’re equipped to handle the volume of requests and create structures that help many of the businesses affected by this crisis, and we’ll roll out new SBA products and programs as they become available.”

Immito is one of about a dozen private lenders qualified to conduct SBA loans and was formed by The Local Initiatives Support Corp. in September of 2018 expressly to help fill a perceived gap in SBA funding. LISC itself was formed in 1979 — mostly by a grant from the Ford Foundation — to create jobs in underinvested communities and has invested more than $20 billion since its inception and holds $14 billion in equity.