L.A. County is a giant when it comes to Small Business Administration loans.


The Los Angeles district office of the SBA, which includes Ventura and Santa Barbara counties, has long been the nation's leader in dollar volume of SBA loans made, and at or near the top in number.


"During the last four years, Los Angeles has averaged 5,000 loans annually generating an average annual value of more than $1 billion. No other district office in the nation comes close to that level of performance," said Frank Brancale, spokesman for the SBA's L.A. district office.


In 2006, L.A. trailed New York in the number of loans made (5,135 vs. 6,673) but led in the dollar value of those loans, with $1.1 billion compared to $772 million for New York.


That's because the average loan size in L.A. County is among the highest in the nation, at $221,278. The culprit: higher land values that have driven up the dollar totals of real estate-oriented 504 loans.


"The trend in this area has been to use the 504 program for real estate purchases," said Gloria Miller, western region sales manager for Banco Popular North America. "This is especially true today, when a lot of properties that we used to finance under the traditional 7(a) program are now too expensive to fit under that program's $2 million cap."


Another distinguishing feature of the L.A. market is the diversity of SBA lenders. Besides traditional mainstream banks, numerous ethnic banks have sprung up in recent years and begun offering SBA loans, as have credit unions and community development corporations.


"We have a lot of competition out here right now, with a lot of lenders coming onto the market. They are all encouraged and excited by the growing market for business loans here in L.A.," said Alberto Alvarado, director of the SBA's Los Angeles district office.


Indeed, L.A.'s business community has long been underserved when it comes to bank loans, especially in the last 15 years as major banks headquartered here were either acquired or consolidated to other locations. At the same time, the number of start-ups and small businesses that don't meet standard loan criteria has exploded, making demand for SBA loans in L.A. more intense than almost anywhere else in the nation.


"Even with so many new lenders, the market is not saturated at all," said Mike Owen, executive vice president of San Diego-based CDC Small Business Finance Corp., which two years ago opened an office in Pasadena.

For reprint and licensing requests for this article, CLICK HERE.