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Small Business, Federal Affairs, Banking

Local SBA Office One Of Agency’s Top Performers

Total loan approvals from 1998 to 2002 rank the Puerto Rico & U.S. Virgin Islands office No. 2 among SBA’s small-market districts


February 20, 2003
Copyright © 2003 CARIBBEAN BUSINESS. All Rights Reserved.

The Puerto Rico & U.S. Virgin Islands district office ranked No. 2 from 1998 to 2002 and No. 3 in fiscal year (FY) 2002 among the U.S. Small Business Administration’s (SBA) small-market districts.

"Considering the district office’s size and that we are a small market, with fewer small businesses and banks participating in the SBA loan program than in other states, this is quite an accomplishment," Ivan Irizarry, SBA district office director for Puerto Rico and the U.S. Virgin Islands (USVI), told CARIBBEAN BUSINESS.

The SBA categorizes its 70 district offices nationwide into five groups--large, medium, moderate, small, and very small--based on the number of small-business firms, according to U.S. Census Bureau figures. With more than 100,000 small businesses, the Puerto Rico & USVI district office falls into the small category, noted Irizarry.

The small-market group includes 21 other districts, among them Nevada; Rhode Island; New Hampshire; Spokane, Wash.; Montana; South Dakota; Hawaii, and El Paso, Texas. The Puerto Rico & USVI district office has been among the agency’s top performers in the group for the past five fiscal years (1998 to 2002).

Of the 70 SBA district offices nationwide, the Puerto Rico & USVI office ranked No. 31 in FY 2002 and No. 32 in a four-year cumulative (1999 to 2002). "In a five-year cumulative for small markets, the local SBA district ranked No. 2 in dollar value and No. 3 in number of loans," said Irizarry. "In fiscal year 2002, the office ranked No. 3 in both categories."

In fiscal years 1998 and 1999, the local SBA district office ranked No. 1 in loans and No. 2 in dollar value, according to Irizarry. "In fiscal years 2000 and 2001, it ranked No. 3 in loans and No. 3 and No. 4, respectively, in dollar value," he said.

SBA’s Puerto Rico & USVI district office surpassed its goal for FY 2002, granting 795 loans, compared with 779 in FY 2001. Additionally, the office approved 21 microloans for a total $551,000, 816 regular program loans for $95.2 million, and 81 disaster loans for $3.4 million. In the aftermath of 9/11, the SBA expanded its Economic Injury Disaster Loan (EIDL) and Supplemental Terrorist Activity Relief (STAR) programs for businesses.

The local office also met or exceeded all export and minority goals (including women), with the exception of the veterans’ category. "The number of veterans seeking SBA loans has declined as the population of older veterans from World War II, Korea, and Vietnam has diminished," explained Irizarry.

The overall number of SBA-guaranteed loans on a national level has fallen in recent years as participating banks have tightened their credit criteria in response to the economic slowdown. "The SBA is a gap lender, and when things get bad, the banks run to us for a loan guarantee," said Irizarry.

Since September 1994, the SBA has stopped providing or servicing loans directly, relying instead on commercial banks, which may or may not seek the SBA’s loan guarantee. "As a result, the district office has lost 17 employees in the past three years, since they weren’t needed to service the loans," said Irizarry. "The office now runs with 37 employees instead of the 86 we had in 1994. We are doing more with less."

Of the 37 employees, eight handle the servicing and liquidation of disaster loans, leaving only 29 employees (26 in Puerto Rico) to handle the regular loan programs.

Despite the challenges, the local SBA district office increased its 8(a) loan portfolio by 15% in FY 2002, from 125 to 144. It also obtained awards for 10% of the companies that hadn’t received contractual support in the past.

"We secured 46 procurement contracts and 25 modifications for a dollar value of $19 million, compared with 35 contracts and 51 modifications for $16 million in fiscal year 2001," said Irizarry. "That’s significant considering the fact that there’s no major procurement office in either Puerto Rico or the U.S. Virgin Islands."

The local SBA district office was also able to increase the number of HUBzone firms by 133%, from nine in FY 2001 to 21 in FY 2002.

"The local SBA district office counseled more than 700 8(a) businesspeople and provided management & technical assistance to more than 16,400 entrepreneurs in fiscal year 2002," said Irizarry. The district office’s total economic assistance for FY 2002 was $118 million.

"We have made a tremendous contribution to the local economy in the past five years, despite the economic conditions and banks tightening their credits requirements," said Irizarry.

This Caribbean Business article appears courtesy of Casiano Communications.
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