Marketplace Today Blog

By Rick Romell
Milwaukee Journal Sentinel

Lenders provided $31.4 million in government-guaranteed financing to Wisconsin small businesses in January — down from the December number but higher than the January levels of the last few years.

January typically is a slow month for U.S. Small Business Administration loans, Eric Ness, the agency’s director for Wisconsin, said Monday. But despite the continued economic sluggishness, a package of government incentives designed to stimulate lending lifted the monthly total above any January back through at least 2006.

“It’s pretty amazing that in this economy we’re higher than the last four or five years,” Ness said. “It’s working.”

The $31.4 million extended last month compares with $17.0 million in January 2009, $29.2 million in January 2008, $25.7 million in January 2007 and $23.8 million in January 2006.

The largest loans last month included $1.7 million from Legacy Bank for the City Market restaurant to be opened in Whitefish Bay, $1.5 million from the Wisconsin Business Development Finance Corp. for a Hampton Inn in Tomah and $1.4 million from the finance corporation to Burlington Hotel Group LLC in Burlington.

Reacting early last year to the recession, the federal government increased its guarantees on SBA loans and agreed to pay fees that formerly had fallen to borrowers.

Also implemented were measures to encourage purchase of loans by secondary parties — an important step because by selling some of its loans a bank gains money it can then lend to other businesses. The secondary market all but froze with the economic crisis of 2008, Ness said.

“Since 40 percent of the loans are sold, we needed to get that functioning so they get the cash to relend,” he said.

The Obama administration is proposing further steps to increase lending to small businesses, including raising to $5 million the current $2 million limit on loans under the SBA’s workhorse 7(a) program.