Some lenders participating in the U.S. Small Business Administration's Spokane District loan programs say they expect loan volume to take off, following a dismal start to the year.

The Spokane-based Northwest Business Development Association (NWBDA) is seeing applications rebound since SBA loan incentives in the federal stimulus package went into effect in mid-March, says Debbie Lawton, the association's vice president and senior loan officer.

"We're not where we were last year," Lawton says of the NWBDA loan volume, "but at least we're getting more phone calls and an upward trend in applications."

In another turnaround, Coeur d'Alene-based Mountain West Bank expects record SBA loan volume this month and a strong year, also due at least partly to stimulus incentives, says Bob Beck, vice president of Mountain West's SBA division. Mountain West is a perennial leading SBA lender in SBA's Spokane District.

The federal stimulus package allocates $375 million to the SBA to waive fees for loans and raises the federal guarantee behind certain loans to 90 percent from the previous 75 percent to 80 percent.

NWBDA, a nonprofit certified development corporation that handles loans under the SBA's job retention program, had a volume of 41 loans totaling $22.9 million during the 2008 federal fiscal year, down 27 percent in dollar amount from 48 loans for $31.5 million the year earlier. That decline has continued to deepen into this year, but has seemed to be turning around in recent weeks now that the stimulus funds are available, Lawton says.

In 2008, Mountain West made 139 SBA loans totaling $20.2 million, down 5 percent in dollar amount from $21.3 million on 110 loans. Loans there also slowed to a trickle in the first part of this year.

"In January through March, our SBA loan business was $3 million," Beck says. "We had almost no requests. People's attitude about borrowing was not good. They had no hopes."

In March, an uptick occurred after the stimulus went into effect, and then demand ratcheted up sharply.

"April was phenomenal, with applications totaling $6 million to $7 million," Beck says.

He estimates the bank will issue $10 million in SBA loans this month, and says, "That would be the biggest month in the history of Mountain West's SBA loan department."

Through SBA programs, the federal government guarantees portions of certain loans, reducing the risk lenders face. The SBA backs two types of loans. NWBDA is one of three certified development corporations in Washington state approved to issue one of the two types of loans, called a 504 loan, that can be used only to buy or improve land or buildings or acquire long-term equipment.

The other loan type, called a 7(a), usually is issued by a bank and can be used for additional purposes, including startup or working capital.

To a borrower, the fee waiver works out to a savings of about 2 percent of the loan for 504 loans, and at least 2.75 percent for 7(a) loans, Lawton says.