More SBA loans issued in Southern California

Small-business lending across the nation remains slow, but a welcome thaw seems to be underway in Southern California — at least when those loans come with backing from the federal Small Business Administration.

After being turned down six times recently for a conventional small-business loan, dentist Richard Gusilatar was able to buy his own dental practice in Woodland Hills, thanks to $510,000 in loans guaranteed by the SBA.

The owners of Cafe Santorini and the Rococo Room banquet hall in Old Town Pasadena just received a $1.1-million, fee-free SBA real-estate loan to buy a nearby building to expand.

Alliance Internet Technology, a Pasadena computer equipment seller, got a $200,000 line of credit backed by the SBA so it could place larger orders with manufacturers.

SBA loans: An article in Business on Monday about Small Business Administration loans referred to a Pasadena computer equipment seller as Alliance Internet Technology. The correct name of the company is Alliance Integrated Technology. —

All of these business loans were made by banks and other lenders that have been approved to offer SBA-backed loans. SBA itself does not make loans, but guarantees them. The loans typically go to small businesses that don’t otherwise qualify for a standard business loan but still are considered a good risk. SBA loans often have longer repayment periods.

Since last spring, more and more businesses in Southern California have received SBA loans, thanks to new incentives provided by the federal government. The temporary measures cut the fees that borrowers pay, while increasing loan-guarantee levels up to 90%. Typically SBA guarantees are around 75%.

In the district that covers Los Angeles, Ventura and Santa Barbara counties, the number of SBA-backed loans issued from October through March almost doubled to 1,206 from 694 a year earlier.

“That program has been a dramatic difference-maker” for lenders and borrowers, said Antonio Zate, Los Angeles SBA sales manager at Wells Fargo Bank. “It has allowed us to get off the fence on certain transactions.”

In the Los Angeles district, the dollar amount of SBA loans returned to pre-recession levels, more than doubling to $589 million in the six months ended March 31. But the number of loans, though up from the recession’s bottom, is still only half of what it was in the same period in 2007 and 2008.

Lenders are still cautious, said banker Patrick Zarifian of California Credit Union in Glendale, which doubled its SBA loans to 13 in the last six months. The quality of borrowers who come into his bank may be up, but plenty of businesses are still in bad shape and can’t qualify for even an SBA loan, he said.

“If I had to draw a line,” he said, “the people who were above that are still above. The people who are hurting — very few have moved above that line and say business has picked up.”

The increase in SBA lending is being driven by creditworthy small businesses that are finally ready to buy new equipment or expand, as well as by the federal incentives, bankers said.

Those incentives have been extended through May, and bankers hope proposed legislation will keep them in place through the end of the year

Panos and Vasken Haitayan, brothers who own Cafe Santorini, used their loan to close escrow this month on the building where they plan to open Pandora on Green, a larger banquet room.

“We have been losing bigger groups and we had been looking for a space to expand our catering and banquet room business,” said Panos Haitayan, who expects to hire 40 part-time workers to staff the new venue. The brothers were happy to land the SBA loan soon after they found their dream location, he said. “It was the right time.”