ABA Banking Journal
No Result
View All Result
  • Topics
    • Ag Banking
    • Commercial Lending
    • Community Banking
    • Compliance and Risk
    • Cybersecurity
    • Economy
    • Human Resources
    • Insurance
    • Legal
    • Mortgage
    • Mutual Funds
    • Payments
    • Policy
    • Retail and Marketing
    • Tax and Accounting
    • Technology
    • Wealth Management
  • Newsbytes
  • Podcasts
  • Magazine
    • Subscribe
    • Advertise
    • Magazine Archive
    • Newsletter Archive
    • Podcast Archive
    • Sponsored Content Archive
SUBSCRIBE
ABA Banking Journal
  • Topics
    • Ag Banking
    • Commercial Lending
    • Community Banking
    • Compliance and Risk
    • Cybersecurity
    • Economy
    • Human Resources
    • Insurance
    • Legal
    • Mortgage
    • Mutual Funds
    • Payments
    • Policy
    • Retail and Marketing
    • Tax and Accounting
    • Technology
    • Wealth Management
  • Newsbytes
  • Podcasts
  • Magazine
    • Subscribe
    • Advertise
    • Magazine Archive
    • Newsletter Archive
    • Podcast Archive
    • Sponsored Content Archive
No Result
View All Result
No Result
View All Result
ADVERTISEMENT
Home Commercial Lending

The Best-Kept Secret in Small Business Lending?

October 30, 2015
Reading Time: 3 mins read
Banks Lake in Washington State. Photo by Todd Petit

Banks Lake jetskiing in Washington State - Photo by Todd Petit - Creative Commons 2.0 Attribution License

By Jessica Milano

We all know that banks are vital providers of small business credit because of their community engagement, extensive local market knowledge and deep customer relationships. All too often, though, an otherwise strong small business is unable to qualify for a loan due to a collateral shortfall, short credit history or the lingering effects of the recession.

However, an innovative program run by the U.S. Treasury Department funds state credit support programs, such as loan guarantee and loan participation programs, which give lenders an easy-to-use tool to bring borrowers’ applications in line with credit policy. The State Small Business Credit Initiative provides funds to individual states and municipalities to use for financing small businesses that do not qualify for credit in more traditional ways.

In 2014, Ceiba College Preparatory Academy, a public charter school in California’s Pajaro Valley Unified School District, faced an outdated campus, a growing student population and a need to relocate and expand. Since its launch in 2008, the academy’s campus had been secured by a series of one-year leases. This practice left the academy without collateral, a difficult position for a school looking to relocate and expand. Due to the academy’s not-for-profit status, it could not elect a personal guarantor to support the loan necessary for its relocation.

Tom Brown, co-founder and CEO of the academy, turned to Santa Cruz County Bank in Watsonville, Calif., to help navigate the academy’s funding challenge. Together, they determined the academy could secure funding through the California State Small Business Loan Guarantee program (SAFE-BIDCO), which had been granted federal funds from SSBCI.

Working with SAFE-BIDCO, the academy was able to secure a guaranteed $2.5 million in support of a $3.3 million loan from Santa Cruz County Bank. With the support of these funds, the academy transformed 28,000 square feet of the new facility’s warehouse space, added a 7,000 square foot mezzanine and created 21 classrooms, an assembly and cafeteria space.

In Washington, Sunbanks Resort serves more than 60,000 visitors per year on its 197 acres and 5,000 feet of waterfront on Banks Lake in Electric City for camping, hiking and watersports, along with a restaurant and general store.

To increase the number of summer guests, Sunbanks Resort owner and veteran Patrick Welton needed to replace his old wells with a reliable water source, upgrade the marina and add more lodging. However, with the full-service resort operating as a seasonal business and residing on leased state land, traditional bank financing was difficult to obtain.

First Sound Bank in Seattle used funds made possible through Washington’s Small Business Credit Initiative to lend Welton the capital he needed to install a 3,000-foot water line from Electric City and add new beach front units and a 50-slip marina. Welton was also able to leverage $5 million in additional public and private investments. Within the next year, Sunbanks Resort projects that 19 new full-time jobs will be created or retained as a result of the financing.

Community banks are the most active participants in the SSBCI program. Of the $800 million in lending supported by the program, 84 percent was lent by banks with less than $10 billion in assets, and 58 percent by banks with less than $1 billion in assets. To date, SSBCI has helped more than 12,400 small businesses in a diverse range of industries across the country—from retail trade and manufacturing to accommodation and food services—access $6.4 billion in private-sector small business lending or investments that wouldn’t be possible without the program’s support.

SSBCI differs from the Small Business Administration and other federally backed loan programs in that each state is responsible for designing and implementing its own small business funding model. This flexibility gives each state the authority to structure a program best suited to its economic needs to generate the greatest economic growth. Participating in the SSBCI program has allowed banks of all sizes to engage in more economic development activities that strengthen small businesses that may not qualify under their standard underwriting requirements.

The program’s success in spurring private lending and investing will continue because funds stay with the states in perpetuity. To build on these efforts to provide access to capital for small businesses, the administration and members of Congress have proposed extending the program with an additional $1.5 billion in funding—continuing a successful partnership.

Jessica Milano is deputy assistant secretary for small business, community development and affordable housing at the U.S. Treasury Department.

ADVERTISEMENT
Tags: Community developmentSmall business lending
ShareTweetPin

Related Posts

Did you know that the federal government is a major source of bank balance sheet volatility?

Commercial Lending
May 15, 2025

How tax payments and entitlement spending make balance sheet management trickier.

Podcast: Accelerating banking for quick-service restaurants

Podcast: Accelerating banking for quick-service restaurants

ABA Banking Journal Podcast
May 8, 2025

As independently owned and operated small businesses, fast-food restaurant franchisees have unique business needs. They have mobile and often part-time workforces, complex inventory management and the constant challenge of managing both a small business and being the face...

Survey finds small-business lending fraud on rise

How a Georgia community bank supports government-guaranteed lending nationwide

ABA Banking Journal Podcast
May 1, 2025

Government-guaranteed lending requires special expertise and back-office functionality that grows increasingly expensive for smaller banks.

CFPB launches ‘tip line’ to report on bureau employees

CFPB to ‘deprioritize’ small-business lending data collection enforcement

Commercial Lending
May 1, 2025

The CFPB will not prioritize enforcement of its Section 1071 small-business lending data collection rule for businesses not covered by a recent court-ordered stay.

SBA proposes to lift moratorium on 7(a) nondepository lenders

SBA reinstates stronger underwriting requirements for 7(a) loans

Commercial Lending
April 25, 2025

The Small Business Administration has reinstated stronger underwriting requirements for 7(a) loans through the issuance of a Standard Operating Procedure document.

CFPB claims ‘complex’ pricing drives up cost of financial products

CFPB stops enforcement of nonbank registry rule

Commercial Lending
April 14, 2025

The CFPB will not enforce a Biden-era rule requiring certain nonbank lenders to register information about their company with the bureau along with any agency or court orders concerning consumer protection violations.

NEWSBYTES

#PracticeSafeChecks campaign wins two Telly Awards

May 21, 2025

Proposed amendment would add credit card rate cap to Senate stablecoin bill

May 21, 2025

ABA, associations urge senators to reject adding credit card routing mandates to stablecoin bill

May 21, 2025

SPONSORED CONTENT

Choosing the Right Account Opening Platform: 10 Key Considerations for Long-Term Success

Choosing the Right Account Opening Platform: 10 Key Considerations for Long-Term Success

April 25, 2025
Outsourcing: Getting to Go/No-Go

Outsourcing: Getting to Go/No-Go

April 5, 2025
Six Payments Trends Driving the Future of Transactions

Six Payments Trends Driving the Future of Transactions

March 15, 2025
AI for Banks: A Starter Guide for Community and Regional Institutions

AI for Banks: A Starter Guide for Community and Regional Institutions

March 1, 2025

PODCASTS

Podcast: Accelerating banking for quick-service restaurants

May 8, 2025

How a Georgia community bank supports government-guaranteed lending nationwide

May 1, 2025

Podcast: Quantum computing’s shakeup in payments, cybersecurity

April 24, 2025
ADVERTISEMENT

American Bankers Association
1333 New Hampshire Ave NW
Washington, DC 20036
1-800-BANKERS (800-226-5377)
www.aba.com
About ABA
Privacy Policy
Contact ABA

ABA Banking Journal
About ABA Banking Journal
Media Kit
Advertising
Subscribe

© 2025 American Bankers Association. All rights reserved.

No Result
View All Result
  • Topics
    • Ag Banking
    • Commercial Lending
    • Community Banking
    • Compliance and Risk
    • Cybersecurity
    • Economy
    • Human Resources
    • Insurance
    • Legal
    • Mortgage
    • Mutual Funds
    • Payments
    • Policy
    • Retail and Marketing
    • Tax and Accounting
    • Technology
    • Wealth Management
  • Newsbytes
  • Podcasts
  • Magazine
    • Subscribe
    • Advertise
    • Magazine Archive
    • Newsletter Archive
    • Podcast Archive
    • Sponsored Content Archive

© 2025 American Bankers Association. All rights reserved.