U.S. lending boosts state companies

Arkansas Elite Welding Academy was in a difficult situation — it had a waiting list of students clamoring to get into training classes but the company hadn’t been in business long enough to get financing to expand.

“Someone really had to bet on us,” said Misty Pitman, director of operations for the company. “They had to buy into our vision.”

The academy turned to U.S. Bank and the Arkansas district office of the U.S. Small Business Administration for help. It worked.

In March, a U.S. Bank loan guaranteed by the Small Business Administration allowed Arkansas Elite Welding

to purchase and renovate a building in Quitman, just down the road from where the business was operating in Bee Branch.

“Our revenue figures were good for a 2-year-old business but they were limited because we only had room for 28 students,” Pitman said. “We weren’t really established long enough to get [traditional] funding.”

In June, the expanded academy opened with 65 welding bays. “We doubled our capacity and tripled our revenues,” Pitman said.

Arkansas Elite Welding is one example of how the Arkansas office of the Small Business Administration is helping small companies grow and prosper. The federal agency guaranteed more than $163 million in loans to small businesses in Arkansas that otherwise would not have had access to capital to start, grow or expand.

Those loans, made for the year that ended Sept. 30, helped support more than 3,949 jobs throughout the state.

“The SBA guarantee is used to get across the finish line those really hard deals that banks couldn’t normally do within their own credit policy,” said Edward Haddock, director of the Arkansas district office. “The heart of what SBA does is to help underserved borrowers.”

The federal agency’s microlending program, which targets loans of under $50,000, exploded with growth. The program made about $2.3 million in loans to 75 businesses across the state. The average microloan was $30,500.

Microlending reached record levels in 2019, according to Haddock. “Microlenders are getting our funds at an increasing rate and we want to continue to see that grow,” he said.

Under the microlending program, the Small Business Administration lends money to intermediaries like Forge Community Loan Fund of Huntsville. Forge then turns around and lends money to small businesses that don’t have access to capital.

“We are set up to provide loans to people and businesses that typically can’t get loans from banks,” said C.J. Sentell, executive director of Forge. “We continue to be amazed by the demand for these types of financial products.”

During the 2019 fiscal year, Forge also produced record

numbers, making 87 loans in 29 Arkansas counties for $2.8 million, a 158% increase over the previous year.

Sentell noted that many loans are made to entrepreneurs just starting a business. “That has become our niche because so few banks will fund startups,” he added. “Most of the demand we see is from startups and entrepreneurs.”

Arkansas Welding Academy’s expansion, Pitman said, has been able to fill a critical need in the state economy — providing skilled welders who can step into a job immediately — and develop career opportunities for Arkansans not ready to pursue a college degree.

“There’s a huge demand for this skilled trade,” Pitman said. “We have contractors reaching out to our school to recruit our graduates to fill positions. Contractors need more welders than we can send them and that’s a great problem to have.”

The program is improving economic prospects for young workers, she said, noting that graduates average $2,800 per week in wages. “We have so many students who weren’t successful in school and weren’t successful academically, but they are successful in this industry,” Pitman added. “It really changes their lives and it’s inspiring to watch.”

Businesses like the welding academy are the prime target for federal support, according to Rick Ricciardi, vice president of business development at U.S. Bank in North Little Rock. “They are the perfect, typical SBA loan and are a great example of why the program is in place,” he said.

The Small Business Administration has offices in Little Rock and Northwest Arkansas that develop partnerships with public and private organizations to help small businesses start, grow and succeed.