
DATE: Monday, March 24, 1997                TAG: 9703220312

SECTION: BUSINESS                PAGE: D1   EDITION: FINAL 

SOURCE: BY TOM SHEAN, STAFF WRITER 

                                            LENGTH:  121 lines

SECOND TIME'S A CHARM TIME, EXPERINCE AND MONEY GAVE SUSAN HUDSON A SECOND CHANCE TO PARLAY HER KNOWLEDGE OF SBA LOANS INTO A SUCCESSFUL BUSINESS.

A decade ago, Susan Hudson embarked on a long-held goal: starting her own business.

She had taught high-school math in Indiana and Michigan, done marketing for a large Ohio bank, bought and sold securities for a nationwide brokerage firm and provided financial planning for owners of small businesses.

Along the way, Hudson earned a master's degree in business administration and developed a knack for helping companies get Small Business Administration-guaranteed loans. But when she tried to parlay her skills into a business, she was hobbled by the lack of some key ingredients, such as having adequate financing and a broad network of business contacts.

``I was beating my head against the wall and wondering, `Why isn't this working?' '' said Hudson, who later joined Virginia Beach-based Branch Banking & Trust Co. of Virginia.

Starting her own company has been easier the second time around.

With help from her administrative assistant, Sheila Guillette, and $140,000 of backing from the Eastern Virginia Small Business Investment Corp., Hudson opened Mid-Atlantic Small Business Finance Inc. in February.

``This time, the people were there, the experience was there, and the money was there,'' she said at the company's office in downtown Norfolk. ``Things seemed to fall in place.''

Her customers are local banks, and her service involves guiding small-business owners through the application process for SBA loans. Her first loan application involves the purchase of a company being spun off by a much larger company.

Many small businesses, especially younger ones, lack the track record or collateral necessary to get a conventional bank loan. With a guaranty from the SBA, some are able to get the funds they need for equipment, inventory and buildings from banks or other lenders.

The SBA's largest program guarantees 75 to 80 percent of a small-business loan from a bank or commercial lender. But the approval process can be intimidating for loan officers as well as applicants.

``Most lending officers have not done a significant volume of SBA loans to be comfortable with the process,'' said Lawrence N. Smith, president and chief executive officer of Resource Bank in Virginia Beach.

Resource, which has an active SBA lending program, decided to use Hudson's services to bring in additional loans, Smith said. That's because the SBA programs will help some companies become larger and more creditworthy, which will foster additional loan demand in the future.

Among bankers and others in the Hampton Roads financial community, Hudson has developed a reputation for quickly spotting which applications are likely to qualify for SBA approval and which ones won't. Her familiarity with the nuances of SBA rules can speed up the approval process once a loan application arrive at a bank, Resource's Smith said.

Hudson was able to get start-up financing from the Eastern Virginia Small Business Investment because of the need for her services and her track record while working on SBA loans for Branch Banking & Trust of Virginia, said J. Alan Lindauer, president of the Norfolk-based Eastern Virginia.

``She was a very good profit center for the bank,'' he said.

In return for her services, Hudson will receive fees from lenders providing SBA loans.

``There's no additional cost to the borrower,'' she said. ``We have to disclose to both the lender and the borrower who is being paid what and by whom.''

That arrangement isn't typical. Many of the advisors helping businesses apply for SBA loans collect their fees from the applicant. Elsewhere in the country, that has led to charges that some advisors charge exorbitant feeswhile delivering questionable advice.

So far, that hasn't become an issue in Virginia, said Roy Baldwin, deputy director of the SBA's Virginia district. Baldwin said he was aware of a half-dozen individuals or companies in the state advising applicants for SBA loans.

In the early 1990s, the SBA's lending programs came under attack from members of Congress, who questioned the use of federal subsidies for businesses. With its budgets stretched, the SBA guaranteed fewer loans.

In Virginia, the volume of SBA-guaranteed lending dipped in fiscal 1993 but resumed climbing the following year. For the fiscal year that ended last Sept. 30, the volume of guaranteed lending in Virginia surpassed $90 million, or three times what it was for 1991.

Hudson figures the volume of SBA-guaranteed lending will continue to grow because of the attention paid to entrepreneurs and their needs for financing.

``Whenever you're dealing with Congress there are uncertainties, but it would be pretty tough for someone to go back to their congressional district and say they voted against the SBA's lending programs,'' she said. ``The numbers are there, and the benefits are there. ''

Hudson's company rents office space adjacent to Eastern Virginia's office in the Main Street Tower building. By making space available to Hudson's company, Eastern Virginia hopes to draw on her analytical skills when making its own investment decisions, Lindauer said.

In the process of seeking financial backing from Eastern Virginia, Hudson worked with Guillette, her assistant, for six months writing a detailed business plan. ``That involved a lot of long hours,'' she said.

What proved more important than their plan was an ability to bring several pieces together.

``Ten years ago, I wasn't ready,'' Hudson said. ``I didn't quite know what the combination was.'' ILLUSTRATION: Color photo by Lawrence Jackson/The Virginian-Pilot

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SBA guaranteed lending continues to grow in Virginia

For complete copy, see microfilm

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MAJOR VIRGINIA SBA LENDERS

Total dollars approved for SBA 7(a) guaranty loans in fiscal 1996

for all of Virginia except for the Washington suburbs:

1. The Money Store Investment Corp., $11.03 million, 40 loans.

2. The Business Loan Center, $7.36 million, 16 loans.

3. Southern Financial Bank, $3.87 milllion, 41 loans.

4. Patriot National Bank, $3.66 million, 15 loans.

5. NationsBank, $3.48 million, 36 loans.