It might be getting easier for small business owners to get loans, based on recently released information from the Small Business Association.
In turn, students planning to start a business might have an easier time as well.
Mel Aanerud, assistant district manager for the Minnesota branch of the Small Business Association, said the organization approved 2,654 loans with a combined worth of $569 million in the last fiscal year, compared to 2,570 with a combined worth of $519 million during the year before that.
For more information on small business loans, go to www.sba.gov/mn
“The number of loans we have given out has gone up every year since 2000,” he said.
While the Minnesota branch is the 26th largest in the country, it consistently ranks within the top 15 in number of loans approved.
The fact that 447 of 450 banks in the state have at least one SBA loan is another reason it’s listed high in the rankings, he said.
According to SBA’s Web site, U.S. Bancorp., a bank based in Minneapolis, was listed as the largest provider of SBA loans in Minnesota.
Joe Brodsky, vice president of the SBA division at U.S. Bancorp, said he is pleased to have a strong partnership with the SBA.
“Our partnership with the SBA goes back more than 20 years,” he said. “We think SBA is a great opportunity for small businesses just starting,” Brodsky said.
Because banks usually do the most work on loans, it’s not uncommon for a bank to be the top financial institution to offer these loans, he said.
Minnesotans have a higher rate of paying off the loans than many other states, Aanerud said. In some states, like California, more residents applying for loans don’t own as many things outright, he said.
“The people out there had big homes, big cars, expensive toys, but didn’t own anything,” Aanerud said.
While the Minnesota SBA approves a lot of loans, its rate of bad loans – which Aanerud said are defined as loans in which the borrower is at least two payments behind – is lower than the national average.
Only 3.4 percent of Minnesota loans are considered bad, and the rate of loans never repaid is 1.7 percent – one-third the rate of the national average, Aanerud said.
However, business owners who applied for an economic-injury loan after the Interstate 35W bridge collapse or the recent flooding in Southeastern Minnesota wouldn’t be included in the number of loans from last fiscal year, Aanerud said.
These are listed in a separate category because disaster relief fluctuates, he said.
Aanerud said companies can’t complete their economic injury loans until they know their total losses.
Brodksy said U.S. Bancorp will continue to work with the SBA because it’s important for people to know there are resources to help them start businesses.
The Small Business Investment Expansion Act of 2007 passed through the U.S. House of Representatives Sept. 27, and awaits approval from the U.S. Senate. The act, if passed, would make it easier for businesses to apply for loans.
Aanerud said the problem with the act is when larger companies receive a SBA loan, they already have the equity – money or assets a borrower puts up to be considered for a loan – so their risk is lower.
“Small business that are just starting up need the money more than the larger firms,” he said.