Banc of California, a financial institution based in Brentwood, has been involved in Small Business Administration lending institutionally for more than 15 years. Christopher Baron, president of commercial and community banking, said the bank specifically has “a great home field advantage here in Los Angeles.”
The team focuses on sectors including entertainment, veterinarian and physicians’ practices, smaller insurance agencies and manufacturing, distributing mostly SBA 7(a) loans but also some 504 loans.
While 504 loans tend to be geared toward the purchase of fixed assets and are more long term, 7(a) loans are a bit more flexible and growth-oriented, often used to refinance existing debt, as working capital or for real estate.
Baron identified helping clients secure owner-occupied office spaces as the “key driver” for the bank’s SBA loans, noting that many small business owners, especially in the medical space, want to own their own buildings.
Being headquartered in Los Angeles – a city with a vast small business landscape – Baron said Banc of California’s SBA clients are oftentimes longtime clients with the bank.
Craig Christy, president of Burbank-based post-production company Christy’s, fits the bill having been a client of Banc of Cal since 2005.
“We’re a bank that focuses on this market, regardless of the SBA,” Baron said. “We have relationships with tons of small businesses across Los Angeles. Mr. Christy is a great example … and is indicative of a lot of our SBA relationships, where we already have a pre-existing relationship.”
After determining that Christy’s needed more space for its operations, Christy began speaking with his banker who referred him to Banc of California’s SBA program. Once he officially started the loan process, it took about three months to secure a $3.5 million 7(a) loan to finance a new building for his business.
Baron finds that many clients are surprised by the speed at which the bank can execute these loans, calling client feedback “relentlessly positive across the board.”
“A lot of people go into the SBA process thinking it’s going to be particularly difficult, because it’s a government program and they are happily surprised, more often than not, that the process is as seamless as it is,” Baron said.
One reason for this efficiency is Banc of California’s status as a preferred lender.
The bank’s SBA loans range from $350,000 to $7 million with an average of between $1.2 million and $1.7 million. This year they’ve lent out a “ballpark” of $100 million in SBA loans, Baron said.
Working with SBA
Changes to SBA lending policy have been a topic of conversation in the industry lately. In addition to an emphasis on small dollar lending, recent SBA rules that went into effect in mid-November include the streamlining of 504 debt refinancing for both borrowers and lenders and eliminating the requirement that borrowers show a minimum reduction in loan payment from refinancing.
Banc of Cal’s SBA team is “engaged completely” with SBA oversight, Baron said. “We incorporate those changes seamlessly and they’ve not been problematic from our perspective at all.”
Baron said he appreciates the chance to partner with SBA and work with small businesses that Banc of California may not typically be able to loan as much money to or loan to at all based on regulations.
“These are programs that really help you do things that sometimes you don’t get a chance to do as a bank and I think that’s pretty great,” Baron said. “… Because of the support, especially in the 7(a) program of the SBA guarantee, the bank is comfortable with less money in projects because you’ve got support from the program.
“The program is structured to help everybody get to the finish line,” he added. “That’s the idea.”
