SAN FRANCISCO (
wants small-business owners to know they want your lending business.
In the past 12 months, Wells Fargo approved 3,176 loans worth $1.24 billion backed by the Small Business Administration, the most it (and any other bank, for that matter) has approved in one fiscal year in terms of volume and number of deals, the company announced Monday.
Even with the average loan size at $390,000, Wells Fargo wants small-business owners to know it is looking to do more lending with a range of business sizes and growth stages.
"We are all about making sure we cover small businesses," says Chris Ledesma, vice president of strategy for Wells Fargo's SBA lending division. He referred to a Northern California baby clothing start-up approved for a $91,000 line of credit as well as larger real estate transaction or business acquisition loans.
"We want to service every level of small business that we can," Ledesma says. "We're bullish on small-business lending."
The company has seen a steady increase in loan demand over the past year, driven by rent replacements and other real estate purchases, business acquisitions and expansion, it says. Wells Fargo approved $398 million in SBA loans during the September quarter, up from $299 million in the December 2011 quarter.
While the environment is still a challenging one, small-business owners are feeling more confident and optimistic and starting to take advantage of business opportunities. At the same time, overall credit quality among borrowers is improving, Ledesma says.
"Borrowers are starting to pick up," he says.
"They've had time to find their new normal. Their businesses and their cash flows are stabilizing," he says. "We're finding more creditworthy borrowers, and that's a good thing."
Overall SBA lending topped $30 billion in the 12 months ending Sept. 30 -- the second-largest dollar volume ever, the agency said this month. This year's amount was surpassed only by fiscal year 2011, which was boosted heavily by the loan incentives under the Small Business Jobs Act of 2010, the SBA said in an
In total, 53,848 loans were approved to small businesses through the SBA's main loan programs -- 7(a) and 504 -- compared with 61,689 loans last year worth $30.5 billion and 60,771 loans in the 2010 fiscal year worth $22.6 billion.
"Reaching such strong numbers is a clear sign that both the business and lending communities are regaining their confidence in the economic climate of the country," SBA Administrator Karen Mills says. "It means that the credit markets are increasingly willing to help small businesses establish themselves, grow and create new jobs for Americans."
The SBA's incentives as well as streamlined processes and other loan program enhancements have resulted in nearly 1,300 lenders returning to SBA lending, opening up more points of capital access for small businesses, the agency said.
Large bank lending (or the lack of lending) to small businesses has been a source of much media and industry attention since the recession. On the one hand, many of the banks say they have been lending (albeit to larger, more creditworthy borrowers), while many super-small business supporters say the banks have all but closed up shop for small-business loans.
In September 2011, the SBA and 13 of the largest U.S. lenders -- Wells Fargo and large bank peers
Bank of America
-- entered an agreement to increase lending for small business by committing to $20 billion over the next three years. The
recently announced that so far $11 billion has been committed to by the banks.
"We have tried to be very consistent on how we've looked at credit for our small-business owner borrowers and customers. We have not changed that much over the years," Ledesma says. "In fact we are looking at ways internally to expand our reach to small business. We are committed to hiring people in new markets, so they can reach out to small business owners and frankly get more loans to them."
Bill Hoyt of Plant City, Fla., was recently approved for a loan by Wells Fargo to buy his commercial landscaping business,
. The company has eight full-time employees.
With a background in real estate development, but forced to work at a dental management company doing real estate contract negotiations as a result of the recession, Hoyt was unhappy in his position and realized he wanted to work for himself. He worked with business brokers to find an appropriate independent business to buy.
Several brokers pointed him in the direction of the services industry, which could provide strong recurring revenue. But Hoyt knew his retirement funds wouldn't be enough to buy the business he chose.
"With the retirement funds that I would bring to the table
I knew that I would need to supplement them to acquire the size business I was trying to get a hold of," Hoyt says.
He says Wells Fargo was recommended to him (he also made preliminary inquiries at other banks) because they had already had done due diligence on his landscaping business before his offer.
"We closed on the 27th on September. We signed the first agreement on July 11. It was really reassuring no one was wasting time and watching the clock. They were all pulling their weight," says Hoyt, who declined to share the amount of loan he was given.
Hoyt adds that Wells Fargo also incorporated two to three months' worth of working capital to help him run the business and required that the seller retain an interest in the business while Hoyt got on his feet.
When asked if he would go through Wells Fargo for future financing needs, he says: "I wouldn't hesitate to do it again."
-- Written by Laurie Kulikowski in New York.
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