Northwest Business Development Association, the Spokane-based nonprofit that puts together government-backed loans for small businesses, says its loan volume in the federal fiscal year that ends today was looking to be nearly double what it was last year.


The NWBDA, which has offices here and in Renton, Wash., is one of two certified development companies, or CDCs, in the state of Washington authorized by the U.S. Small Business Administration to originate a type of SBA loan called a 504.


As of last week, the organization had secured 90 such loans, totaling $40 million, for small businesses this fiscal year, says Fred Schunter, its president and CEO. Thats up sharply from the 55 loans for $24.5 million it secured in the fiscal year that ended Sept. 30, 2003. It handled just 20 loans for $10.4 million in fiscal year 2002, Schunter says.


The NWBDA was on track this year to be ranked 21st among the 268 CDCs nationwide, compared with 53rd two years ago, he says.


Our company has taken an outstanding program to many more potential users that are in small business, Schunter says.


The 504 program provides fixed-asset loans to small or medium-sized businesses that have net worth of $7.5 million or less and less than $2.5 million in annual profits, he says. The loans must be used to pay for the acquisition or construction of a commercial building in which the borrower is the principal occupant.


Under the 504 program, the lender typically lends up to 50 percent of the project cost, while NWBDA lends up to 40 percent and the borrower provides the rest, Schunter says.


For every $50,000 NWBDA loans, the borrower must create one job, unless the business is a manufacturer, is located in a labor surplus area, or is owned by a minority, he says. In those cases there is no minimum number of jobs that must be created.


The loans are guaranteed 100 percent by the U.S. Small Business Administration, Schunter says.


Schunter credits the increased loan volume to the organizations business development officers, who he says have been more effective in working the market. Two years ago, he says, the NWBDA employed just two such officers. Today, it has six, who cover the entire state as well as parts of Idaho.


Nothing gets done without people, Schunter says. Good people make things happen.


Schunter says he added the positions because he knew the demand for SBA loans was out therehe just needed people to go serve it.


Schunter contends that no other program can facilitate entry into a new commercial business with as much ease as the SBAs 504 program.


He says, however, that some business owners think that because the NWBDA is affiliated with the SBA, theres a tremendous amount of red tape in procuring a 504 loan.


Schunter says the entire process typically takes just four or five business days, from the time NWBDA receives a loan application to the time it gets final approval from the U.S. Small Business Administration.


The 504 program is the best thing for small businesses since sliced bread, he asserts.


Schunter adds that only three loan applications this year were declined, and none was denied for lack of financial performance.


Typically, Schunter says, if business owners go through a conventional source for financing, theyll have to come up with 30 percent to 35 percent in equity, whereas with the 504 program they only have to put down 10 percent to 15 percent.


For a small business, the difference is huge, he says, adding that the less-stringent requirements enable a business owner to keep more cash to finance production.


There are restrictions on the amount a business owner can borrow. Loans can be made for no less than $150,000 and no more than $1.2 million, unless the business is in an economically distressed area, in which the cap is extended to $1.3 million.


Schunter recently added a business development officer to cover the Wenatchee area, as well as Idahos Kootenai County, which NWBDA recently received authorization to cover. The nonprofit already had authorization to cover three other counties in Idaho, and its in the process of gaining authorization to cover the four counties surrounding Portland, Ore.


Schunter says two-thirds of NWBDAs production is in the Interstate 5 corridor in the Seattle area.


He says one area the organization would like to cover better is the I-5 corridor from Seattle to Olympia, and adds that hed like to hire another officer to cover that market.