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SMALL BUSINESS : Small Business Loans : Last bank left standing for small business loansThe choice of lenders willing to work with small business owners has changed dramatically in the last year with the exception of one bank ( Wells Fargo ). While other financial major companies decided not to help, Wells Fargo (WFC, Fortune 500) increased its lending, emerging as the new number-one lender through the Small Business Administration's loan programs. CIT Group (CIT, Fortune 500), JPMorgan Chase (JPM, Fortune 500), Banco Popular of North America and others have cut their SBA lending by more than 70% this year. Meanwhile, Wells Fargo upped its loan volume 4%, from $583.4 million in 2008 to $605 million this year. Some of that gain may be fueled by the acquisition of Wachovia in late-2008, another bank that traditionally made many SBA backed small business loans. Together, the two banks lent $742.3 million this year -- down 24% from last year, but still far more than any other bank put into the small business market. The next runner-up, U.S. Bank (USB, Fortune 500), made $249.5 million in loans through the SBA's flagship lending program. What Wells Fargo did right: Wells Fargo's ascendance isn't solely due to its competition's collapse. The bank made two key strategic decisions that turned into major advantages. First, Wells Fargo doesn't resell its loans on the secondary market, where many banks unload bundles of the SBA-backed loans that they've made. That market froze last fall after Lehman Brothers' collapse, leaving many banks unable to find buyers for their loans -- and without those sales, the banks lacked the capital to make new small business loans. Second, Wells Fargo focuses on making traditional 7(a) loans, which can total as much as $2 million each. The Small Business Administration guarantees a portion of its 7(a) loans -- if the business owner defaults, the government pays the bank back for the insured portion. But the SBA also offers a variety of "Express" loan programs, which involve lower loan amounts, lower government guarantees, and less paperwork. Because banks scrutinize those loans less, they're more prone to go bad when the economy gets rough. "Wells Fargo is more of a traditional 7(a) lender. Their loans are larger and there is collateral behind them," says industry observer Coleman. "They do a more extensive underwriting analysis than the SBA Express lenders, which makes them feel more comfortable in assuming risk. For some lenders, the model is broken for those smaller Express markets, and so they have backed out of the market." The new lending scene: Tom Burke, Wells Fargo's senior vice president of SBA lending, sees his bank's new leading role on the lending scene as a validation of what it has been doing all along. While Wells Fargo never before held the number-one spot, it has routinely been in the top two or three. "We have been consistent. Our portfolio performs consistently," Burke says. "We always said that we are a player in the market. It is part of our DNA to help our small business customers." Wells Fargo plans to press its advantage. "We are increasing staff to take advantage of gaps in the marketplace," Burke says. "We saw weakness in our competitors, and we decided to take advantage of what was going on in the marketplace." One new small business owner is grateful that Wells Fargo is still actively lending. Jennifer Braun obtained an SBA loan from Wells Fargo in June to purchase a five-year old event-planning business called Festivities. Located in Medina, Minn., just outside of Minneapolis, the small business has seven fulltime staffers and a handful of part-timers who work weekends to cover events. Previously employed at an event-planning firm, Braun knew it was risky to change careers in a recession: "All along, I kept thinking this is the worst time to quit my high-paying corporate job, as the primary breadwinner in our house." But her doubts didn't stop her from following her instincts. "I just kept having the gut [feeling] that this was the time to act," she says. "You see a trend in downturns that a lot of companies are looking for mergers or consolidations, and that just seemed like something that I needed to capture -- to get a great business at a great price, because everyone is so scared, they are not moving forward on it." Braun started her research by Googling "How do I get a business loan?" and ended up being directed to Wells Fargo by a broker. Both Braun and her husband quit their jobs and currently devote all of their energy to growing Festivities. She's optimistic that the economy is on the rebound: "I have had a strong belief in next year," she says. 0:00 /3:04Befriend your small biz lender Without the loan from Wells Fargo, Braun wouldn't have been able to take the entrepreneurial leap. "I would still be working at my corporate job," she says. "It would have been a dead dream for now." The future: Next week, the government wraps up its 2009 fiscal year, and the SBA numbers are likely to be grim. To try to revive the market, Congress allocated funds in February's Recovery Act to temporarily eliminate fees for SBA loans and increase to up to 90% the percentage of the loan that is insured against default. Those moves have had some effect: "If you look in terms of all the government programs that are out there -- increasing that 7(a) guarantee to the bank has made the greatest impact to getting money to Main Street, in my opinion," says Coleman. "This is a good time to be making SBA loans," Wells Fargo's Burke says of the added incentives. Even with the stimulus cash, the number of 7(a) loans made this year is on track to drop 38% from last year, to just over 40,000 loans. The total amount lent is also down sharply: Though mid-September, loans totaled $8.7 billion, down 28% from the same time last year. But Wells Fargo, at least, expects its coffers to remain open to small business borrowers source: http://money.cnn.com/2009/09/25/smallbusiness/sba_lending_wells_fargo/?postversion=2009092515 Opening a Small BusinessAspiring entrepreneurs are fairly excited when they make the decision to open a small business. 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