SBA backs 157 loans worth $22.2M in 1Q ’12
If the results of the first quarter of the federal fiscal year are any indication, 2012 should be good for small and mid-sized business lending activity in Puerto Rico and the U.S. Virgin Islands, which is already picking up significantly in contrast to last year’s results.
During an interview with News is my Business, U.S. Small Business Administration Regional Administrator Jorge Silva-Puras said during the first three months of the fiscal year — from Oct. 1 to Dec. 31, 2011 — the agency has backed 157 loans requested in Puerto Rico and the U.S. Virgin Islands worth $22.2 million.
The most recent totals represent a 25 percent increase in the number of guaranteed loans and a 40 percent jump in financial support, Silva-Puras said.
“We’ve started the year on a good note, if you consider the increase in lending,” he said.
When broken down, the loans approved so far include 135 granted under the SBA’s 7(a) program, which provides financial help to businesses with special requirements. Included in that segment are businesses that handle exports to foreign countries, businesses that operate in rural areas, and for other very specific purposes.
“In that category, we’ve guaranteed $16.9 million in loans, which represents a 76 percent increase from the $9.6 million guaranteed during the same period in 2010,” he said, noting that the number of cases also increased to 135 from 100 during the same year-ago quarter.
One of the factors accountable for the higher monetary value of the loans is the increase in loan caps that came into force last year, to $5.5 million on loans granted to manufacturing companies and $5 million to all other types of businesses.
Meanwhile, Silva noted that the SBA also backed a smaller number of loans under the agency’s 504 program, through which it offers businesses a long-term financing tool. During the first quarter of 2011, the agency signed off on 22 loans worth $5.4 million, he said.
“We saw an increase of 12 loans year-over-year, but the money value dropped by 35 percent from the $8.2 million approved during the quarter in 2010,” he said, attributing the reduced money figure to the end of incentives available during last fiscal year under the Small Business Jobs Act.
The first quarter’s results place Puerto Rico among one of the agency’s best-performing regions in the U.S., and the expectation is to maintain that growth curve, as it “represents a domino effect” for the economy, Silva-Puras said.
Opportunities for P.R. in Obama’s speech
In his State of the Union Address last week, President Barack Obama focused on four areas, what he called a “blueprint for an economy that’s built to last” that Silva-Puras said Puerto Rico could benefit from.
Obama spoke of an economy built on manufacturing, energy, skills for workers, and a renewal of values. In manufacturing, he proposed taking away incentives from companies that send their jobs overseas and creating better tax conditions for those that choose to remain on U.S. soil.
“This is where I believe there are opportunities for Puerto Rico. If we work on presenting Puerto Rico as one more place where American jobs could be created and kept, I think it’s a win-win situation,” he said.
In the area of energy, Obama proposed granting incentives to the tune of $10 billion over the next decade to get them to adopt renewable and “green” energy systems. For Puerto Rico, where energy costs have been a historical sore point for the corporate sector, grabbing a piece of those incentives could also prove opportune, Silva-Puras said.
The other two points, job skills and values, call upon the needs to establish agreements with community colleges to retrain workers and restructure the tax system so that the burden is proportionate to the individual’s financial condition, respectively.
“We have yet to see how Congress will react. However, Obama is promoting ideas that in the past had Republican Party support. But the atmosphere in Washington is very complicated right now, so we have to see how it goes,” Silva-Puras concluded.
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