SBA keeps cash flowing

Six months ago, during the recession, Ami Ebeid took a great leap of faith and bought her first small business.

Friends and family members questioned her logic, but Ebeid didn't waver from her decision to buy Horizon Dance, a wholesaler of dance-themed bags such as backpacks and totes.

“They kind of looked at me like, ‘Are you sure?'”

Yeah, she was sure.

Ebeid had done her homework, nearly four years of it, while unemployed between moves from Massachusetts to California and then to Nebraska in 2007. So when President Barack Obama signed the American Recovery and Reinvestment Act last February, Ebeid was well-positioned to take advantage of low-cost loans through the $787 billion stimulus package.

Days after the bill passed, Ebeid signed on the dotted line, securing $535,000 in funding to purchase Horizon Dance. She saved $12,000 in fees that were waived under stimulus guidelines.

“It's just huge. It's so much money, especially when you're first starting out,” Ebeid said.

During the 2008-2009 fiscal year ending in September, Nebraska's division of the Small Business Administration loaned a record $118.4 million. The previous high was $109.1 million in 2006.

Before approval of the stimulus program, Nebraska was on pace to distribute between $80 million and $90 million, said Leon Milobar, SBA district director.

The number of loans, 476, was comparable to past years. However, the average loan amount increased by more than $27,000 over 2008, because the stimulus law increased lenders' loan guarantees to 90 percent from 75 percent, and modified business size standards to include a higher volume of businesses, including car dealerships, Milobar said.

Businesses with a net worth of up to $8.5 million, or a two-year average of no more than $3 million in profits after taxes qualified for the loans.

“Up until the stimulus package was passed, our monthly numbers had significantly fallen,” Milobar said. “We saw a significant increase in overall loan activity after the bill was passed.”

Horizon Dance, at 2528 S. 156th Circle, is the first business Ebeid has owned. She said she wanted an opportunity to utilize her design skills and problem-solving abilities.

The money she saved on waived fees translated to increased inventory.

“That's like a whole (warehouse) shelf of bags,” said Ebeid, whose products include duffels, backpacks, totes and garment bags.

Ebeid, who has three part-time employees, sells her products to dance studios and “mom and pop” stores.

In some cases, the impetus for a loan application under the stimulus package came from someone other than the business owner.

Until contacted by their banker, Kent and Ellen Junge weren't thinking about expanding their business, the Cookie Company, during the recession. They used an SBA loan 25 years ago when they opened a franchise of a Lincoln-based company in downtown Omaha.

In March, Kathryn Barker, the Junges' lender with Centennial Bank, contacted the couple and told them the time was right to get another SBA loan and expand to Westroads Mall.

“It was a perfect time. From a lending standpoint, it was a great program for them to get into,” Barker said.

The Junges applied for a $163,080 loan. Barker handled all the paperwork and procedural details while Kent and Ellen worked on the expansion plans.

“If it wasn't for (Barker), we wouldn't have even known about this possibility or seriously looked at expanding our business during these economic times,” Ellen Junge said.

The stimulus has helped banks as well as small-business owners and job seekers, Barker said. The higher guaranteed payback allows banks to give loans with lower interest rates and lower amortization, meaning smaller payments extended over a longer period of time, she said.

“Banks during the recession were sometimes reluctant to assist struggling companies. ...Now we can loan some money and we have assurances that it will be paid back.”

The more-favorable loan terms are scheduled to expire next year unless Congress and the president approve an extension, Milobar said. The loan program has taken a back seat to health care legislation, he said, and starting Monday Nebraska's SBA office will begin transitioning to the terms before the stimulus.

According to Recovery.gov, the government's Web site established for tracking funds dispersed through the stimulus program, 67 SBA loans had been distributed in Douglas County through last week. Eighteen loans were given in Sarpy County, 34 in Lancaster County, and seven were reported in Pottawattamie County.

“We were one of the few districts in the country that met our goals,” Milobar said. South Dakota and Iowa also had “great years,” he added.

Contact the writer:

444-1414, ross.boettcher@owh.com

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