Welcome back to Develop Your Vision, the American Lending Center blog.

We started the year with a bang, closing a $1 million loan to our friend Dr. Yi Chao for his company Seatrec. The loan will allow Dr. Chao the capital necessary to develop his infiniTE™ float – a self-sustaining ocean sensor platform capable of generating its own electricity – to a commercial level.

The loan would not have happened if we weren’t able to take advantage of the State Small Business Credit Initiative (SSBCI), which provided a loan guarantee. And it wouldn’t have happened without Jim Ely, our senior advisor for all things involving government guaranteed lending. Jim has been involved with SBA (Small Business Administration) loans since 1984. He’s president of sbfdoc.org – the Small Business Development Corporation of Orange County – as well as serving as vice chairman of California International Bank.

I cannot think of a better person than Jim to explain the importance of the SSBCI program and how it will change the face of small business lending. (Yes, ALC is certified to participate in the program, if you’re wondering.) Here’s what Jim had to say.

Why SSBCI Is So Good

“SSBCI is very helpful because it guarantees loans will be repaid,” Ely said. “It’s offered by the state. It means that ALC and other lenders are able to lend money to people who can’t qualify otherwise. Maybe they need the money for a short time, or they lack collateral. The program now also allows for flexible amortization.

“The key (for lenders) is that this is backed by actual dollars in the bank.”

Lenders, whether they are banks or non-bank lenders like ALC, have their own criteria for determining whether a company or person is credit worthy – worth taking a chance on lending the institution’s money. The SSBCI was developed to help stimulate small business growth by guaranteeing that it would pay 80% of a lapsed loan if all other options to collect the money have failed.

SSBCI money originally came from the federal government through the CARES Act. California’s share went to the State of California Infrastructure and Development Bank (iBank), under the State Treasurer’s Office.

On The Ground

Ely said that traditional bank lenders have been tightening their credit requirements quite a bit, especially since the pandemic. The ever-present trend toward conservative approaches to business lending means even with the SSBCI guarantee, most loans are smaller.

“We’re talking about the $100,000 range for most small business loans,” Ely said. “ALC is one of a very few non-bank lenders. And ALC is pretty unique in that they will entertain larger loans — $1 million versus that $100,000.”

To be eligible for an SSBCI guarantee, a business must be headquartered in California and have fewer than 750 employees. But being eligible and being approved are two different things.

For example, Seatrec qualified for the Climate Tech Finance Program through certification from the Bay Area Air Quality Management District in order to push the SSBCI loan guarantee forward. It then had to meet ALC criteria.

Going Forward

Ely said that money for small businesses, particularly early-stage small businesses, continues to be hard to come by, with lenders generally tightening credit requirements. But California received more than $1 billion in CARE Act money, and the SSBCI program will be “a viable, sustainable program for many, many years to come.

“If you’re paying attention to what’s going on, small business loan demand is rising slowly,” Ely added. “But the increased risk is balanced by the government guarantees. There will be lots to do in the coming years.”

Thanks again to Jim Ely for all his help and expertise. We at American Lending Center are proud of our track record with small business loans, and excited about the new opportunities created by SSBCI.

That’s how we help Develop Your Vision.

John Shen

CEO & co-founder

American Lending Center

About American Lending Center: A Financial Times (FT) Americas’ Fastest Growing Company 

American Lending Center (ALC) is a private nonbank lending institution and nationally recognized leader in small business lending. By the end of 2022, ALC had offered strategically structured senior loan products to 83 qualified projects in 19 states, contributing to a combined construction and business expansion budget of over 1.2 billion dollars. ALC’s lending practice has successfully created more than 13,000 new jobs nationwide since 2009. As one of only a handful of nonbank institutions designated to provide immediate financial relief to struggling small businesses during COVID, ALC provided PPP loans to nearly 30,000 small businesses across all 50 states and Washington, D.C. 

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