Tightened credit and a slowing economy combined to sharply reduce the number and dollar value of loans approved by the Small Business Administration in its 34-county Syracuse district during the agency's 2008 fiscal year.
The combined number of loans approved under the SBA's 504 and its 7(a) loan guarantee programs in the district - an area covering the entire eastern half of the Upstate region - fell 16 percent, from 956 in the 12 months ending Sept. 30, 2007, to 804 in the 12 months ending Sept. 30 this year.
The dollar value of the loans approved under the two programs fell 19 percent, from $157.05 million in fiscal year 2007 to $127.34 million in fiscal year 2008.
In just the Central New York counties of Cayuga, Cortland, Madison, Onondaga and Oswego, the number of SBA loans fell 21 percent, from 266 in fiscal year 2007 to 210 in fiscal year 2008. The dollar value of the loans declined 35 percent, from $42.52 million to $27.46 million.
Nationally, the drop in the number of loans was even bigger. The volume fell 29 percent, from 110,275 in 2007 to 78,317 in 2008. But the dollar value fell only 13 percent from $20.6 billion in 2007 to $17.96 billion in 2008 because the average size of the loans increased.
The average loan size nationally increased from $142,000 in 2007 to $183,000 in 2008. Though the total number of loans is down, the larger loan sizes may help the more sustainable and successful small businesses expand, the SBA said.
In the 34-county Syracuse district, average loan size fell from $164,276 to $158,388.
Nationally, loan volume in both programs had set records in each of the previous five years.
SBA Syracuse District Director Bernard Paprocki said the declines reflect the slowing of the economy, which lowered demand for loans from small business borrowers. Higher fuel costs also may have had an impact by leaving companies with less money for expansions, he said.
"They're not as willing to incur additional debt at this time," he said.
A tightening of credit also played a role, with lenders less willing to loan money to some of the less credit-worthy small businesses, even with SBA guarantees, he said. That was especially true on the national level, but maybe less so in the Syracuse area, where banks for the most part avoided the subprime mortgage debacle and the credit crunch it caused, he said.
Paprocki said lending standards may simply be returning to more traditional levels after years of easy credit.
"I do believe that good businesses are going to find money," he said.
The SBA does not make direct loans. It guarantees portions of loans made by banks.
SBA-backed loans can only be made to small businesses. Generally, that means companies with no more than 500 employees, but the limit can be as high as 1,500 employees for certain industries. In some industries, a company's average revenues determine whether it is a small business.
Source:http://www.syracuse.com/business/index.ssf?