Today, U.S. Senator Maria Cantwell (D-WA) released a Senate Small Business Committee report showing small business lending in Southwest Washington is lagging behind other areas of the state but has room for growth. Cantwell also convened a field hearing in Vancouver to hear testimony from small businesses, lenders and economic development leaders about the challenges and successes of getting loans for local businesses to expand and create job.
Southwest Washington was one of the hardest hit areas in Washington state during the economic downturn. While capital markets have improved in other regions recently, the region has been slower to recover.
"We know here in the Pacific Northwest about innovation and a 21st-Century economy," Cantwell said during the Small Business Committee field hearing at Vancouver's City Hall. "I'm confident the next great company is being dreamed up right now in a Vancouver or Longview garage and it's just about whether they're going to get access to capital. We need to make sure they have the seeds for that growth."
Cantwell, chairwoman of the Senate Committee on Small Business and Entrepreneurship, released the report during a committee field hearing in Vancouver entitled "Capital Access for Main Street: Meeting Opportunities of Growth along the Lower Columbia."
The hearing focused on two popular loan programs available through the U.S. Small Business Administration (SBA) -- the 7(a) loan program, which provides working capital to businesses with difficulty obtaining traditional financing, and the SBA 504 loan program, which provides loans to purchase equipment or real estate loans. Through these programs, the federal government assumes part of the risk to encourage lenders to open access to capital.
The report, based on SBA data for October 1 to April 1 from 2009 to 2014, shows:
The SBA's Portland district office, which covers Oregon and Southwest Washington, is the only market on the West Coast where approved SBA loans are down from six years ago, according to the report. Loan volumes increased in Los Angeles, Sacramento, San Diego, San Francisco, Santa Ana, and Seattle.
More than 100 lenders have issued 7(a) loans in Southwest Washington in 2008 through the Portland SBA District Office. Only 30 of those lenders issued more than 5 loans over the six year span -- indicating banks are interested in the program, but are not taking full advantage of its opportunities.
Loans in Clark and Cowlitz Counties decreased by 16.2 percent and 33.3 percent, respectively, from 2009 to 2014.
7(a) loan amounts approved in the beginning of 2014 are 12.1 percent higher than in the same period in fiscal year 2009. That long-term growth in lending is a positive development, as more financing is pushed out the door. Regionally, the largest gains were in Multnomah County, where 7(a) loan dollars approved were 265.9 percent higher than in fiscal year 2009 (though down from a peak in fiscal year 2011).
In fiscal year 2013, the SBA approved 46,398 loans in the 7(a) program, which totaled $17.9 billion from 2,345 lenders. The program supported 483,976 jobs and assisted 40,574 small businesses. In the 504 program, there were 7,708 loans worth $5.2 billion, which supported $11.8 billion in overall lending and 90,257 jobs.
Cantwell will use testimony from Wednesday's hearing to examine ways to improve SBA loan programs, which are administered without subsidy.
"We welcome opportunities to work with SBA and other institutions to enhance awareness of SBA program attributes," said Craig Chance, senior vice president at Columbia State Bank, in testimony to the Small Business Committee hearing. "So many business owners think of the SBA programs as the "lender of last resort" when the reality is it's a way to give small businesses an opportunity to have financing on terms that are very similar to those terms enjoyed by their much larger competitors that have direct access to Wall Street."
There were approximately 35,329 small businesses in Clark County in 2011.
Cantwell also heard from business owners such as Amy O'Hara, who with her husband, Alan, owns "When the Shoe Fits," a comfort shoe store with three locations in Vancouver and one in Beaverton, Ore. O'Hara used SBA 7(a) lending to help expand their company. Despite having good credit and business history, O'Hara said he struggled to get conventional financing.
"We now proudly employ nearly two dozen people, provide them with health insurance and disability benefits, vacation pay, a 401K plan and most importantly, a good working environment and a living wage," O'Hara said. "We want businesses like Shoe Fits to open and work. My concern is how do the next Alan and Amy get the bit of help they need?"
The field hearing at Vancouver City Hall was the first stop in Cantwell's statewide "Listening Tour on Small Business Job Creation."
On Thursday, April 17, Cantwell will speak at the Tri-City Economic Development Council's Bridging Partnerships Small Business Symposium in Pasco.
Next week, Cantwell will convene a hearing with innovators in the Seattle high-tech community on the importance of research -- and the "Small Business Innovation Research" (SBIR) program administered by the Small Business Administration. She'll be joined by new SBA Administrator Maria Contreras-Sweet.
Cantwell then will travel to Arlington to hear from local businesses affected by the State Route 530 mudslide. The SBA oversees low-interest loans to businesses that are damaged or suffer economic loss from a disaster. SBA also administers loans to homeowners to help with damages not covered by insurance. The visit will follow President Obama's scheduled visit to the disaster site on April 22.
On Friday April 25, Cantwell will join Senator Jim Risch (R-ID), ranking member of the Small Business Committee, for roundtables in Spokane and Coeur D'Alene, Idaho, to discuss the importance of increasing Inland Northwest small business exports.
Cantwell has long been a Senate leader in expanding opportunities for small businesses to grow and create jobs. She played a pivotal role in the Senate passage of the landmark Small Business Jobs Act (SBJA) of 2010, which expanded small businesses' access to capital and created new export initiatives.
The Small Business Administration (SBA) reported that 549,391 small businesses were operating in Washington state in 2011. That represents 98.1% of all employers and these businesses provide 53.7% of private sector jobs in the state.