Lenders Offer Flexible Help to Quake Victims : Borrowing: Institutions big and small are willing to adjust repayment schedules and provide streamlined loan applications.

Small business owners and consumers whose buildings or homes were damaged or destroyed in last week’s earthquake may benefit from flexible repayment schedules on any outstanding installment loans and a streamlined application process for new loans offered by some local banks.

Both large financial institutions such as Great Western Bank and smaller ones such as California United Bank are stepping in with special programs to assist consumers who suffered major losses in the quake.

“All they have to do is ask. In the majority of cases there is something that can be worked out to help people who need more time to repay a loan or quick cash to repair a damaged business,” said Marshall Milligan, chief executive officer of Ventura County-based Bank of A. Levy.

The bank’s portfolio of commercial loans, including small business loans, is about $150 million, Milligan said.

Specifically, Bank of A. Levy is allowing forbearance to people unable to keep current on loan payments.

Each case is looked at individually to determine how much time the borrower needs to catch up on loan payments, said Milligan.

“You also have cases where business owners need quick cash to begin repairs. In these cases, we’re trying to speed up the process by making unsecured loans, again on a case-by-case basis,” he added.

President Clinton released another $240 million in Small Business Administration loans last week to help local businesses rebound from the earthquake, and several local banks will play a role in getting some of those funds out where they are needed.

American Pacific State Bank, based in Sherman Oaks, is the fourth biggest issuer of SBA loans in the country, and already has a sizable SBA loan portfolio in the San Fernando Valley.

American Pacific has contacted every one of its SBA loan holders to offer help if they need it, said Jim Degnan, executive vice president.

“We’re open to any reasonable request made of us by our customers,” said Degnan. “We’ve instructed our managers to go outside of individual loan limits if it makes sense right now.”

Degnan added: “We’re also offering our customers an opportunity to make interest-only payments on their (SBA) loans so they can use the rest of the money to replenish their inventory. And if they have to extend themselves with other creditors who may be nervous about our customers’ financial situation, we’re asking them to have these creditors call us and we’ll tell them what kind of people our customers are.”

American Pacific has six branches throughout the Valley and an SBA portfolio of $100 million and community loans totaling $110 million, said Degnan.

He said that other customers who have installment loans with the bank are also eligible for the interest-only payment plan.

CU Bancorp, the parent of California United Bank based in Encino, with only three SBA loans on its books, has also been approached by SBA officials and asked to help finance the rebuilding of businesses in the battered Valley.

“We’ve been asked to do bridge financing, and we’re anxious to help in any way. We’ve also offered to donate office space to SBA officials who are out here,” said Dave Rainer, California United Bank chief operations officer.

The SBA loan application process can be lengthy and cumbersome.

Some applicants, whose damaged or destroyed businesses are their sole source of income, simply cannot wait for the normal application process to run its course.

“The approval and documentation process on an SBA loan takes time. But there are people out there who are in immediate need of a loan, and we can help them with bridge financing,” said Rainer.

Under a bridge financing plan, California United Bank will make an SBA loan to a pre-qualified applicant shortly after the application is submitted and before all of the paperwork is completed.

The bank will be repaid when the SBA completes the paperwork.

Large banking institutions such as Great Western have been running newspaper ads to advise their customers in Los Angeles and Ventura counties affected by the earthquake of special programs designed to help them with credit card or loan payments.

Some Great Western customers may be eligible for a moratorium on their monthly mortgage payments for up to three months without late charges.

In addition, the bank’s credit card customers could be eligible for an increase in their credit limit or payment deferrals of up to 60 days.

But many banks and S&Ls; who are giving borrowers deferrals on their payments still must come up with those overdue payments in a lump sum once these payment schedules resume. Some consumers have said this is unfair.

And given the long slump in residential real estate values even before the earthquake, and because even those homeowners with earthquake insurance have large deductibles on their policies, it seems likely that some people will just walk away from their homes, boosting the number of foreclosures in the Valley.

“For people with major damage, I’d expect them to walk away. Wouldn’t you?” said Ben Hunnicutt, who runs Southland Financial Network, a Woodland Hills mortgage broker.

He knows several families in the area whose homes will “have to be bulldozed. It seems the number of foreclosures has to increase.”

Great Western spokesman Ian Campbell said it was “reasonable to expect some losses,” particularly from foreclosures stemming from homeowners who decide that it would be too expensive to rebuild a damaged or destroyed home and instead walk away from their mortgage loans.

“However, our preliminary analysis indicates that our losses will be small. If past experience is an indicator, you’ll find that a surprisingly large number of people are so attached to their homes that they will rebuild and keep up their loans,” Campbell said.