MOUNT AIRY — Ted Ashby, president and CEO of Surrey Bank & Trust in Mount Airy, was selected by the American Bankers Association to represent the nation’s banks before the House Small Business Subcommittee on Investigations, Oversight and Regulations last week. Ashby testified in support of the Small Business Administration 7(a) Loan program in Washington, D.C. The American Bankers Association is the united voice of America’s hometown bankers — small, regional and large banks that together employ more than 2 million women and men, hold nearly $17 trillion in assets, safeguard $12.8 trillion in deposits and extend more than $9 trillion in loans.
Under Ashby’s leadership, Surrey Bank has become a leading Small Business Administration (SBA) lender. The locally-owned bank first began using SBA loans in 1999 as a tool to better help small businesses in Surry and surrounding counties obtain financing on more flexible terms.
SBA granted Surrey Bank its Preferred Lender Status in 2003 after determining the bank had sufficient experience and resources to properly administer the program. Since that time, the bank has actively participated in the SBA 7a Program and has earned “Community Bank of the Year” award for loan originations in North Carolina for 12 of the last 14 years. Surrey Bank consistently ranks among the top 10 SBA lenders in the state for banks of all sizes. It has also received a Virginia Community Bank Lender of the Year award. Surrey Bank is a past recipient of the Community Bank of the Year award for SBA Region IV, which includes Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina and Tennessee.
Because of the bank’s long and successful use of SBA programs, the American Bankers Association asked Surrey Bank & Trust to represent the nation’s community banks regarding the SBA’s flagship 7(a) program. Ashby was asked to give his opinion on the strengths and weaknesses of the program; the ways it has helped community banks, like Surrey Bank, serve their markets; and any improvements that could be made to the program.
In his testimony before the House panel, Ashby stressed the critical role the SBA program plays for early stage businesses. He pointed out that the SBA program helps facilitate lending that may not have been possible under conventional financing which may require more collateral, a guarantor, or shorter loan amortizations.
“The guarantee helps reduce the risk and capital required for banks, and facilitates loans that might never have been made without this important level of support,” Ashby said. As a portfolio lender, these programs allowed Surrey Bank to attract a wider range of profitable customers and improve the financial condition of the bank, he commented.
He also noted the support SBA provides for borrowers and financial institutions, including the 7(a) program’s business plan requirements for startups, credit score software, extended amortizations, higher advance rates on secured loans, avoidance of balloon payments and underwriting based on cash flow. He also pointed out the efficiencies of SBA’s Express Loan Program and “delegated authority” for preferred lenders.
The use of “Delegated Authority” for Preferred Lenders, like Surrey Bank, allows the bank to modify loans, providing the borrower with an opportunity to work through short term cash flow issues and or reschedule debt payments without being forced into liquidation, Ashby said.
SBA programs reduce the cost of a loan transaction, lower the collateral requirements, provide fast response times, and improve cash flow and reduce the amount of working capital needed, Ashby said, adding that community banks focus on small business lending, which is critical to economic growth and job creation.
He focused his recommendations for improvement on SBA loan servicing. Specifically, limits on SBA loan consolidating and refinancing make extended additional loans more complex, and liquidation of loans can be unnecessarily delayed with duplicative work. He added that SBA limits on banks obtaining a guaranty poses a “disadvantage to small banks that are portfolio lenders attempting to meet the credit needs of customers in their market” and suggested a carve-out for portfolio lenders with less than $1 billion in assets.
In his closing remarks, Ashby pointed out that the success of the program has been replicated in communities across the country. “This is why ABA supports the Small Business Committee’s effort to build on the positive aspects of the program and consider improvements that would benefit the business community,” Ashby said. “The SBA 7(a) Loan Program is a success and should be vigorously supported in the future. It has encouraged economic growth in our community and has allowed Surrey Bank to meet the credit needs of many small businesses.”
A recording of Ashby’s testimony can be seen at http://smallbusiness.house.gov/calendar/eventsingle.aspx?EventID=399710.
Surrey Bank was founded in 1996 by a group of Surry County business owners with a focus on business lending. Today, it is the only locally-owned bank serving Surry and surrounding counties. The $278-million bank has full service branches in Mount Airy, Elkin, and Pilot Mountain, and Stuart, Virginia. It also operates a loan production office in North Wilkesboro, where it plans to build a full-service branch later this year.
Through its wholly-owned subsidiary Surrey Investment Services, Inc., the bank is also engaged in the sale of insurance and investment products. The insurance division, d/b/a SB&T Insurance, is located at 199 N. Renfro St. in Mount Airy, and offers commercial and personal property and casualty insurance. The brokerage division, which operates through an association with LPL Financial, is located at 145 N. Renfro St. in Mount Airy.