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MBFC Summer 2009 Newsletter – In Your Best Interest
MBFC Fall 2008 Newsletter – In Your Best Interest
MBFC Summer 2008 Newsletter – In Your Best Interest
MBFC Spring 2008 Newsletter – In Your Best Interest
MBFC Fall 2007 Newsletter – In Your Best Interest
MBFC Spring 2007 Newsletter – In Your Best Interest
Minnesota Business Finance Corporation Sends Professionals to School
MBFC Fall Newsletter – In Your Best Interest
Steven C. Preston Sworn In As Administrator of SBA
MBFC Summer Newsletter – In Your Best Interest
MBFC Spring Newsletter – In Your Best Interest
MBFC CEO Named SBA Financial Services Champion
Dance Pioneers Win SBA Entrepreneurial Success Award
$250,000 MBFC Grant Boosts Lakes Area Businesses
MBFC Generates Record Amount of SBA 504 loans
MINNEAPOLIS – Minnesota Business Finance Corporation (MBFC) generated a record number of United States Small Business Administration (SBA) loans that created 887 jobs and retained 979 jobs (that would have been eliminated had the loans not reached small businesses) in Minnesota in its fiscal year that ended Sept. 30.
MBFC originated a record 100 SBA 504 loans totaling $45.4 million. That is a 68 percent, dollar-based increase compared to the previous fiscal year.
“The numbers indicate robust growth for small businesses taking advantage of low interest rates,” said MBFC CEO and President Alexandra L. Blum.
SBA 504 loan interest rates have been averaging around one and a half percent under the prime rate that banks offer to their best customers. “The 504 program enables small companies to access capital markets to lock in these historically-low 10- or 20-year fixed interest rates,” said Blum.
Most MBFC-originated SBA 504 loans went to service firms (22.13) percent, followed by firms in manufacturing (19.86 percent), wholesale (12.32 percent) and restaurants (9.71%).
Stearns County accounted for most MBFC SBA 504 loan activity ($7.4 million), followed by Morrison ($4.5 million) and Hennepin counties ($3 million), a development reflecting continuing business growth in both the Metro and in Greater Minnesota.
The low fee that the SBA charges borrowers for 504 loans in 2005 – 0.192 percent, which has trended continually downward from the 0.775 percent charged in 1998 – was also an incentive for borrowers to take out SBA 504 loans, Blum said.
Blum predicts MBFC’s SBA 504 loan program will continue to grow in 2006 due to a favorable financing climate. “Inflation is forecast to creep up due to higher energy prices, and the Federal Reserve will continue to gradually increase interest rates,” said Blum. “But SBA 504 loan interest rates will remain relatively low and well below traditional commercial bank interest rates.” The Administration apparently concurs. The President has just signed a bill increasing the SBA 504 authorization by 50%, to $7.5 billion in lending nationally for the 2006 fiscal year.
SBA 504 loans are intended for firms requiring funds for purchasing fixed assets such as land, buildings, and machinery and equipment. Job creation is a key qualifying criteria for companies seeking SBA 504 loans. The MBFC has created a total of 11,748 jobs and retained 5,420 jobs in Minnesota through SBA 504 loans it has originated since 1983.
The SBA requires certified development companies (CDCs) like MBFC that are authorized to originate SBA 504 loans to create at least one job per $50,000 in debentures CDCs receive for SBA 504 loans. MBFC generated one job for every $24,378 in debenture capital it received from the SBA for its 504 loans in fiscal year 2005. Since MBFC started originating SBA 504 loans, it has, on average, created a job with every $14,856 in debenture capital received from the SBA. That, according to Blum, is one of the most productive SBA 504 loan-to-job-creation ratios in the country.
MBFC-originated SBA 504 loans have also benefited women-owned businesses. Forty-five percent of all MBFC-originated SBA 504 loans have gone to businesses that are 50 percent or more owned by women.
Although Minnesota is the 19th largest market in the nation for numbers of small businesses that qualify for SBA loans, it ranked fifth in the total number of SBA 504 loans that are made annually.
The significant growth in SBA 504 loans reflects a national trend. The number of SBA 504 loans made nationally in fiscal 2005 increased 16 percent and reached $4.9 billion, the SBA reported in October. Click here to view highlights.
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Minnesota Business Finance Corporation is a certified development company authorized by the SBA to originate and service SBA 504 loans. The SBA 504 loan program is economic development financing specifically designed to stimulate private-sector investment in long-term, fixed assets to increase productivity, create new jobs and increase the local tax base. For more information, visit www.mbfc.org.
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