Business is booming as small-business loans in Nebraska shatter records | Local Business News
Business is booming as small-business loans in Nebraska shatter records | Local Business News

Craig Johnson got a small-business loan 21 years ago when he bought his business, Wayne’s Body Shop.

But when it came time to expand one of his locations last year, he didn’t consider applying for another loan from the Small Business Administration.

“I thought it was more for startup businesses,” Johnson said.

His bank, Cornhusker Bank, however, thought such a loan would be perfect for him, so they referred him to the Nebraska Economic Development Corp., a Small Business Administration lender that specializes in what are known as 504 loans, which allow businesses to buy large equipment or build, buy or expand buildings.

Johnson got a loan with a fixed interest rate for 20 years that allowed him to expand his College View location at 4731 Cooper Ave.

He said getting the SBA loan was more complicated than getting a regular bank loan and required more paperwork, but getting the low fixed interest rate made it all worthwhile.

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“That’s pretty big, so it’s worth the extra work to do it,” said Johnson, who now has a bigger, more modernized space to work on newer vehicles.

Johnson’s loan was among dozens that the Nebraska Economic Development Corp. made over the 2021 fiscal year, making it by far the most-active small-business lender in the state.

The Lincoln-based organization made 77 loans totaling more than $50 million, which was more than twice as many as the next biggest lender.

Scott Sailors, president of NEDCO, said loan volume was very strong in the past year, which is impressive considering the company did virtually no loans for hotels or restaurants, industries that have made up a large portion of its business in the past.

“If we had hotels and restaurants in these deals, we could be up another 50%,” Sailors said.

The pandemic led to some new trends, he said, with more loans being written for businesses such as auto repair shops, used-car dealerships and car washes.

Nebraska sees strong year for small-business lending

The strength of loans processed by NEDCO and other lending organizations helped the Small Business Administration shatter the all-time record for the amount of loans guaranteed in Nebraska, with nearly $244 million in its 2021 fiscal year, which ended Sept. 30. That was $90 million more than 2020 and nearly $80 million more than the record of $167.5 million set in 2011.

Lincoln lending organizations played a big role in that success. In addition to NEDCO, the two other most-successful lenders in 2021 also were from Lincoln.

Union Bank & Trust had the third-most SBA loans and the third-highest dollar amount. The 30 loans worth more than $13.6 million were both annual small-business lending records for the bank.

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“We originated more than double the amount of SBA loans that we do in a typical year,” said T.J. Casady, the bank’s vice president for commercial loans.

Casady said he believes the bank’s success writing Paycheck Protection Program loans — at one point last year it ranked second among all banks in the U.S. for the number of those loans — helped generate good publicity and boosted business for regular SBA loans.

“We were in a great position after assisting so many clients with the unprecedented SBA PPP loan volume, and that brought good notoriety to UBT, which certainly helped carry over additional SBA business,” he said.

Casady said changes the SBA made to the loan process also helped boost the numbers. The agency increased the government guarantee from 75% of loan amounts to 90%, and it also waived fees traditionally charged to both lenders and borrowers.

Sailors said he believes low-interest rates that are fixed for up to 25 years are another reason businesses are now choosing to invest. As is a desire to own their own real estate.

He said commercial real estate values have exploded over the past several years, with valuations climbing even faster than those for residential real estate, and he noted that Nebraska is a good place for business owners to own their own land and buildings.

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The small-business loans, whether they are for starting a business or buying or expanding a building, help to boost the economy and create jobs. The SBA said its 2021 lending in Nebraska either created or saved nearly 5,900 jobs.

The $244 million only represents traditional SBA-backed loans. The SBA also guaranteed more than $1.9 billion in Paycheck Protection Program loans in Nebraska in fiscal 2021 and more than $1.2 billion in Economic Injury Disaster Loans.

Small-business lending is expected to stay strong into 2022. Casady said the SBA is again waiving fees for smaller loans, those for $350,000 or less, “which will continue to make SBA loans an attractive option for small-business owners,” he said.

If NEDCO’s numbers are any indication, next year could be another big year. Sailors said the organization currently has more than 100 deals in its pipeline.

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