Big help for new guys
"If you haven't been in business for a year, you're even less likely to get one (a loan)," Beaubien said.
This fiscal year, the Small Business Administration expects to process more loans than ever for companies like Beaubien's. The SBA took itself out of the process for its most popular loan program by shifting procedural responsibility to lenders, which quickened loan delivery times and gave the agency more opportunity for outreach.
"It's a helpful start," Beaubien said. "We have a new business and they don't like to loan to new businesses."
The SBA backed nearly 83,000 loans during the 2004 fiscal year, nearly double the number of loans processed in 2001.
"This year looks like another 20 percent," said John Dunn, assistant director of the South Florida district.
Overall, almost a third of the loans went to minority business owners, according to a statement issued by the SBA.
Seven to 10 years ago, the average loan in the South Florida district approached $800,000, compared with today's $140,000 average, Dunn said.
"The loans are getting smaller, which means we're getting our money to smaller businesses who have a harder time getting loans," Dunn said.
The SBA offers two main types of loans to small companies -
The first type, the 7(a) program, provides a partial guarantee on a loan that is funded by a participating lender. It is the most basic and most used loan.
The 7(a) loans may be used for most business purposes, such as furniture, debt refinancing or working capital.
The maximum loan that SBA will process is $2 million, with a guarantee of up to 75 percent or maximum guaranty of $1.5 million, Dunn said. This fiscal year, the SBA established a $350,000 cap on a type of 7(a) loan called SBA express, which accounts for 65 percent of 7(a) loans.
The 7(a) express loans are different this fiscal year in that there is no longer any application processed through the SBA. Now, lenders use their own forms and procedures to process loans.
"Banks approve now, instead of SBA approval," Dunn said. "The SBA in the express program is virtually invisible."
The result is a dramatically shorter delivery time for loans. Beaubien, for instance, was able to get his loan in a matter of weeks, not the monthslong process it used to take.
SBA now processes just 10 percent of loans, Dunn said.
"That's how SBA transformed from a back-office loan agency to a marketing agency," Dunn said, adding that the organization now has the ability to to do more outreach, such as teaching banks and the community about the program.
The second type is the 504 loan program, which is a long-term tool for companies that want to expand or modernize, according to SBA.
Mostly real estate or fixed asset loans, 504s require a 10 percent contribution from the borrower. The bank will issue a 50 percent mortgage or lien, while a certified development company will cover the remaining 40 percent of the loan with a second mortgage or lien guaranteed by the SBA.
This fiscal year, the amount of the SBA loan under the 504 program increased to between $1.5 million to $4 million for certain circumstances, such as job creation ability or if the company is a manufacturer.