Heritage Bank first in state to make SBA recovery loan

Heritage Bank of Nevada became the first bank in the state to make a loan under a Small Business Administration effort to help small businesses weather the recession.

The SBA says banks statewide have been cautious about taking on the new ARC loan program that's part of the federal economic stimulus package. (The acronym stands for "America's Recovery Capital.")

Reno-based Heritage Bank made the loan to Custom Caps Shirts Etc. of Sparks.

"It sure helps with the cash flow," said business owner Mike Bass.

Ryan Riggan, a commercial loan officer with Heritage Bank, emphasized that the bank is looking at the loans only for its existing commercial lending customers.

But for some of those bank customers, the ARC loans provide a low-hassle borrowing program that provides some breathing room.

The loans, which are 100 percent guaranteed by the SBA, are available in amounts up to $35,000. The loans can be used to repay other debt, including mortgages and business credit cards. No repayment is required for six months and repayment is scheduled over five years.

The SBA pays interest on the loans to banks, but small businesses don't pay interest on their borrowing.

Riggan said the first ARC loan moved through the SBA's approval process in about two weeks.

"The SBA did a great job of streamlining the process," he said.

John Scott, SBA's district director for Nevada, said lenders in the state have been cautious about the ARC program.

"There is a reticence because so many small businesses are going out of business," Scott said.

Nationwide, SBA had made 806 ARC loans totaling $26.2 million as of last week. The agency is approved to make $350 million in ARC loans.

"This is a new program that is still in the ramp-up phase," said Scott. "And it is ramping up."

He said the SBA believes survival of small businesses is particularly important because small and mid-sized companies will create jobs that will lift the nation out of the recession.

Potential borrowers, he said, should contact their banks to see if the ARC loans are available. Approximately 60 banks and other certified lenders provide SBA loans in Nevada.