That made financing for growth and expansion more economically feasible than during and immediately after 2020. We believe this can be attributed to adequate pandemic assistance coupled with solid 2021 results for many industries here in the North Bay.
George Mavridis: From where I sit, there has not been much of a change or shift. The types of businesses and people that apply for the SBA programs vary -or- are very diverse across industries and backgrounds. For example, we expected to see volume from restaurants, which have been among the hardest hit industries, but the demand has recovered quickly.
Thanks to government relief programs like Paycheck Protect Program (PPP) and Economic Injury Disaster Loan Assistance (EIDL), small businesses have access to working capital to cover rent expenses, pay employees and manage their operations short-term. I am proud to say JPMorgan Chase was at the forefront of delivering PPP loans to small businesses, funding more than 400,000 loans totaling $ 40 billion.
Some business owners, existing businesses in particular, are now focused on ways to stay open long-term that includes expanding their business model to withstand any future disruption by acquiring new businesses.
Bob Thompson: Not really, though there are always ebbs and flows in lending to specific industries. Entrepreneurs have always been and will be risk takers looking for opportunity whether in good times or bad.
Ole Tustin: During the pandemic, businesses that were deemed “essential businesses” did well and in turn applied for new money. Now that most other businesses are stabilizing (those that did not fold), we are seeing a return of all business types. Many of these stabilizing businesses are just now reaching the 12-month mark of positive cash flow required for many SBA programs.
Across the board there has been an uptick in demand, especially in real estate building purchases, but we are also seeing more business acquisitions. I think we are seeing this because rates have been historically low, but also because what many business experiences during COVID has led them to want to control their own future. SBA programs can really help drive that stability and planning for business owners.
Brian Wilken: I think the types of businesses applying for SBA loans has stayed relatively consistent – we see a wide net of industries coming to us at Wells Fargo, and that has remained the case over the past couple of years. Aided by some of the changes made by the SBA, we saw an uptick in refinance opportunities from seasoned businesses over the past two years with customers looking to take advantage of a record low-rate environment.
Now that we’re seeing rates go up as the Fed looks to curb inflation, refinance opportunities are leveling off again, and we expect to continue supporting business owners coming into growth opportunities, including expansion, building ownership, and other types of transactions.
Joseph Wood: We’re seeing larger-size dollar transactions for SBA products going to more complex and sophisticated companies that have larger annual revenues. So, SBA lending is definitely no longer considered just for the small mom-and-pop micro businesses anymore.
Paul Yeomans: Yes, I think people have started to make different choices and one of them has been looking at their level of job satisfaction and the possibility of working for themselves. SBA programs provide that opportunity with business acquisition loans and working capital to support new ventures. There seems to be a greater diversity in SBA customers, which tells me a lot of folks learned the benefits of this type of lending with all of the news around PPP loans.
Compiled by Michelle Fox, North Bay Business Journal researcher.