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Two such businesses that have worked with Fagan at Idaho Independent Bank are Molly Maid and Infofuel Production Co. "We bought a small business in December of 2007, financed through Idaho Independent Bank right when the economy was beginning to show signs of stress," Stephanie Camarillo, co-owner with her husband of Molly Maid in Treasure Valley, said.
Contrary to the way financial institutions generally work, Idaho Independent Bank is looking for people to borrow money.
"We would like to make loans; that's how we make money," Greg Charlton, senior vice president and branch administrator at IIB in Boise, said. "Our loan activity is down. We're looking for ways to get involved with people who need loans. We're out on the street, we make calls each week, we're knocking on doors."
A small percentage of IIB's loans are Small Business Administration loans, according to Karen Fagan, SBA commercial loan officer at the bank. This year, overall, the number of SBA loans the bank has made are up from 2009, but still down from 2008, Fagan said.
"Small business has got to have a purpose for borrowing money. In general, the economy is such that the demand is not as great; they don't have the need. They're not expanding, increasing inventory, or hiring new workers," Charlton stated.
There are some small businesses in the area that have had need for a loan and have been able to take advantage of SBA loans' lower interest rates and smaller down payment requirements. Two such businesses that have worked with Fagan at Idaho Independent Bank are Molly Maid and Infofuel Production Co.
"We bought a small business in December of 2007, financed through Idaho Independent Bank right when the economy was beginning to show signs of stress," Stephanie Camarillo, co-owner with her husband of Molly Maid in Treasure Valley, said.
The interest rates were higher on their initial loan, and though the business was doing relatively well, the couple was working hard to keep it stable. "We were growing, but not tremendously," she said.
The couple returned to IIB and was able to refinance the previous loan with a 10-year SBA loan with a lower interest rate.
"That basically saved us about $15,000 a year. With a company our size - a small to medium-sized business - it gave us that extra cushion in this economy. We've been able to pay the principal without all the interest," Camarillo said.
She said it allowed them to have working capital, as well as a cash reserve.
Sherilyn Orr, co-owner with her husband of Infofuel Production Co., said the couple wanted to buy a warehouse vacated by a neighbor near their North End residence in Boise.
They got the SBA loan in 2008, "kind of a tough time," Orr said. But it allowed them to grow a whole new segment of their web-based video production business - however, not without a learning curve on owning business-functional property in a residential area.
"We had no idea about zoning and permitting," Orr said. They needed to make modifications to the tune of $40,000 to meet all mandatory requirements. They self-funded this part of the transaction.
"As time wore on, things got pretty scary with the economy," Orr said. The SBA loan became a safety net, with a bonus.
"They (IIB) gave us back the money we'd invested in the property. ... It worked out well, even in a terrifying economic climate," she said.
About the only changes in regulations so far regarding SBA loans are, according to Fagan, some tightening on business purchasing financing intangibles. Otherwise, SBA loan transactions have not deviated much.
"The SBA is very receptive to trying to get deals done; they're very helpful," said Charlton.
Credit: Gaye Bunderson
(Copyright 2010 Dolan Media Newswires)