SBA Sees Surge in 504 Loan Program; Access to Capital Remains Critical to Growth in Nebraska

$143.7 Million in SBA Guaranteed Financing to Nebraska Small Businesses Created and Saved

More Than 3287 Jobs During Past 12 Months

 

Omaha, NE – “Small business is big business here in Nebraska.  SBA, along with our financial and resource partners, is here to support the business owners that open their doors or expand in our communities,” says Leon Milobar, District Director for the SBA Nebraska District Office. Overall loan dollars increased in Fiscal 2019 while the number of guaranteed loans approved by the U.S. Small Business Administration (SBA) remained steady.

SBA approved 329 of these loan guarantees for $143.7 million for existing and start-up businesses in Nebraska through banks, credit unions and certified development companies in Fiscal 2019, which ended Sept. 30.

As a direct result of SBA guaranteed small business financing in Fiscal 2019, 1467 jobs were created in Nebraska and 1820 jobs were retained.  According to the SBA’s Office of Advocacy, half of all jobs in Nebraska are from companies with fewer than 100 employees. 

As a federal agency helping lenders in Nebraska and across the country to make small business loans under the 7(a) program, the SBA guarantees that a certain portion of the small business loan will be repaid if the borrower defaults.  An SBA guaranteed loan offers borrowers the potential for a lower equity injection and longer amortization with interest rates capped by the government.

The overall dollar amount of SBA’s participation in 504 projects across the state increased by 87 percent from Fiscal 2018. Overall investment in 504 projects by the SBA, CDC and the individual investors in Fiscal 2019 was $125.6 million – a 64 percent increase from Fiscal 2018.

The SBA’s 504 loan program is a public-private partnership designed to provide attractive, fixed interest rate loans on large equipment and real estate projects for small businesses. Under this program, private lenders provide 50 percent of the project’s financing, with the SBA supplying up to 40 percent and the small business 10 percent. With the 504 program, the SBA works with a Certified Development Company (CDC), a private, nonprofit corporation to support financing to small businesses.  Nebraska’s CDCs are the Nebraska Economic Development Corporation and Community Development Resources, both headquartered in Lincoln. 

“The SBA 504 loan program is an ideal product for businesses to expand, replace and/or purchase real estate or equipment. The increase in 504 loan activity has been driven by the new 25-year term for the loan, low down payment and below market interest rates fixed for the life of the loan,” says SBA Nebraska District Director Leon Milobar.

There were 64 active SBA lenders in Fiscal 2019. The top SBA lending banks were US Bank with 32 SBA guaranteed loans and $3.3 million in volume; Wells Fargo with 26 loans totaling $8.5 million; First National Bank of Omaha with 25 loans totaling $6.3 million, Union Bank and Trust Company with 18 loans totaling $3.1 million and Northwest Bank with 12 loans totaling $4.9 million.  As a continued strong and steady sign of confidence in Nebraska’s entrepreneurial economy, 50 percent of SBA loan approvals in Fiscal 2019 went to fund start-up businesses. 

SBA approved 60 loans to women-owned small businesses totaling $25.6 million.   In addition, there were 19 loans approved to veteran-owned businesses totaling $7.8 million (an increase by 40% compared to last year). Most of SBA financing in Nebraska over the past 12 months went to small businesses located in urban areas (79 percent), with 70 loans going to small businesses in rural regions of the state.

Of the $143.7 million in loans, $55 million (123 loans) was for projects located in Congressional District 01, $65 million (124 loans) was for Congressional District 02, and $22.9 million (85 loans) was for projects in Congressional District 03.

Over the past year, the SBA Nebraska District Office continued to meet face-to-face with lenders across the state, and with extensive community outreach, built awareness with chambers of commerce and community groups with programs on financing and entrepreneurship.

The top four small business industries receiving SBA-guaranteed financing in Nebraska were: Accommodation and Food Services ($23.8 million); Healthcare and Social Assistance ($20.1 million); Professional, Scientific and Tech services ($16.5 million), and Construction ($10.9 million).

In addition to the $143.7 million in SBA-guaranteed financing, our three Nebraska SBA-supported micro-lenders, Nebraska Enterprise Fund, Rural Enterprise Assistance Project in Lyons, and Lincoln-based Community Development Resources, approved a combined total of 116 loans for $1.7 million in Fiscal 2019. The average microloan was less than $14,000. Women-owned businesses were approved for 52 percent of the loans and 39 percent of the loans went to Hispanic-owned firms.

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About the U.S. Small Business Administration

The U.S. Small Business Administration makes the American dream of business ownership a reality. As the only go-to resource and voice for small businesses backed by the strength of the federal government, the SBA empowers entrepreneurs and small business owners with the resources and support they need to start, grow or expand their businesses, or recover from a declared disaster. It delivers services through an extensive network of SBA field offices and partnerships with public and private organizations. To learn more visit www.sba.gov.