With SBA, Huntington Says ‘Yes' More Often
YOUNGSTOWN, Ohio -- Huntington Bank has embraced the U.S. Small Business Administration in its efforts to help entrepreneurs get started, sustain their enterprises and help them expand.
It continues to rank first in the Midwest and second in the United States in the number of loans it’s extended to small-business owners.
The SBA “enables us to say ’Yes’ more often,” says Craig Street, director of SBA lending at Huntington Bank in Columbus. “The SBA allows us to offer better rates and extended terms.”
Adds Joshua Toot, Mahoning Valley market manager for Huntington’s business banking division, “We’ve led all other banks [in the Midwest] in SBA lending now every year but one in the last seven years.”
While SBA lending constitutes a minority of the loans in Huntington’s commercial banking portfolio, many carry less risk than the average commercial loan where the SBA wasn’t involved, Street says.
“Our average business loan is $375,000,” Toot says, while the SBA loans Huntington extends are “a little over $150,000 on average,” Street relates. “That’s skewed because we make a lot of [smaller] loans. We make loans as small as $25,000 and our largest is $5 million.”
Over the last five or six years, he relates, “We’ve found a lot of success with the 7(a) program in particular.” The SBA’s 7(a) program guarantees that should the borrower default, the agency will repay the bank up to 85% of the loan a small-business owner took out to start, acquire or expand his business. Funding may take the form of a line of credit and lines of credit usually carry a variable rate of interest. The SBA says the 7(a) is its most basic and most often used program.
The 504 is the other SBA program small-business owners take advantage of. Under 504, the owner can obtain a commercial mortgage to finance land and buildings or a long-term fixed-rate loan to acquire other major assets such as machinery.
Much of Huntington’s small-business lending in the Mahoning Valley has been to manufacturing and health-care concerns, Toot says. “Every bank has a hot spot,” he says, “and manufacturing and medical are ours.”
Where commercial banks tend to look at restaurant lending with a degree of skepticism, Huntington is more open-minded. “Every bank has different risk tolerances to different industries,” Street observes.
“We’ve financed more restaurants, more startups, than any other bank,” Toot reports. “In the last two or three years, we’ve helped 12 new restaurants to open.”
This story was published in the April edition of The Business Journal.
Copyright 2014 The Business Journal, Youngstown, Ohio.
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