Bullish on Nebraska: SBA Lender NEDCO Fuels Business Growth

Daler Usmanov had leased the home of Unisell Auto for almost eight years.

“When the pandemic was announced in March 2020, business started booming,” Usmanov said. “Pre-owned car sales were almost double compared to the prior year.”

As Usmanov considered a new space for the dealership, the owner’s commercial real estate agent introduced him to Premier Bank, which in turn got Usmanov in touch with the Nebraska Economic Development Corporation (NEDCO) and its loan program.

“A really good commercial banker familiar with NEDCO loan programs will make a huge difference during the process,” he said.

NEDCO is licensed by the U.S. Small Business Administration (SBA) as a CDC (Certified Development Corporation). The nonprofit corporation is designed to support financing for Nebraska’s small businesses.

Lincoln-based NEDCO also represents the biggest provider of SBA 7(a) loans in Nebraska.

The SBA’s 504 program represents loans for large equipment and real estate and, according to administration information, private lenders provide 50% of the project’s financing with the SBA supplying up to 40% and the small business supplying 10%.

“The first thing that attracted me was the 10% down payment versus the 20% conventional commercial loan; for example, if you are buying a building over a million dollars, it makes a difference in your cash flow to put 10% versus 20% down,” Usmanov said.

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In Usmanov’s case, the Bellevue building purchase was financed with a 60% conventional, 40% NEDCO loan with 10% down.

“Just saving 10% on the down payment already helped me to save and purchase the building,” he said. “If it wasn’t for the NEDCO loan program, I probably would not have owned the building today.”

In fact, Usmanov said if the need for pre-owned vehicles remains as strong as it has been, a second location may be on the horizon in the near future.

“The second loan will definitely be through NEDCO as well,” he said. “The people at the SBA and NEDCO are the best. And they are there for business owners like me to make their dreams come true.”

Statewide Impact

NEDCO leadership like President Scott Sailors have a gauge on the strength of respective sectors, via their work with banks and borrowers from throughout the state and, with that being said, businesses like Unisell Auto have bright futures ahead.

“With the chip shortage, you get a shortage of [new] cars, and Americans are keeping their cars longer,” Sailors said of demand in the pre-owned auto space, including auto repair. “A lot of employees are changing their lifestyles. They’re driving more and buying a pre-owned car as opposed to staying in a hotel or eating at a restaurant.”

Such societal shifts are also fueling demand for loans to finance car washes.

“People are taking good care of their cars and they don’t hesitate to buy a year’s subscription,” he said.

A review of funded loans provided by Sailors finds keen activity in the medical/health care, landscaping, transportation and warehousing and construction/contractor spaces. Breweries, professional services (such as engineering and architecture), appliances, manufacturing, fitness, hospitality, insurance, graphic design, child and youth, and convenience store businesses were also represented.

The listed loans ranged from those for additions and construction, to building purchases, refinancing, tenant improvements and renovations. Of those listed, loans were valued from $70,000 to $4.5 million.

“We’re doing a number of doctors’ and dentists’ offices,” he said. “These people are taking a conservative, long-range approach to interest rate strategies. And another thing that we’re seeing, people who have historically leased or rented are deciding to purchase buildings. They’re making a commitment like nothing we’ve ever seen before.”

In fact, 2021 was a year for the record books for NEDCO.

“Regarding our success, Nebraskans are still extremely fiscally conservative,” he said, adding that borrowers will go with the fixed-rate, long-range loan that is a “sure thing” as opposed to taking a little bit lower rate from the outset and “betting things will go down.”

Sailors indicated NEDCO has also developed a strong reputation as a CDC that has the ability to get loans underwritten and approved by the SBA.

“If you can do that with a great level of expertise and a sense of urgency and you’ll be very successful,” he said.

Its robust approved loans and loans in the pipeline, according to Sailors, make NEDCO one of the highest-performing CDCs in the country on a per capita basis.

“If you fail on a project and can’t get that funded, you can lose confidence in a hurry,” he said. “Some banks bring every single loan here. They know they can get the loan done and we’re really good at what we do.”

When asked about prominent departures from the types of loans and borrowers that NEDCO supported around this time a year ago, Sailors spoke to how those 2020 loans represented those for construction in the entertainment industry (hotels, restaurants) that may have taken a year or two.

“We were the largest hotel underwriter in the state,” Sailors recalled.

“With that, in February of 2020, we redlined hotels. We had numerous [hotels] teetering on default in that month.”

Its portfolio, naturally, has “changed dramatically,” with the likes of pivots to other sectors.

Aside from the “usual suspects” — Omaha and Lincoln metro areas — Sailors noted there are a number of projects in Scottsbluff, Kearney, Norfolk, Wayne, Columbus and Grand Island. Communities such as Wayne benefit from the likes of a college presence.

“On a real positive note,” Sailors summed up, “The economic outlook is bullish. The cost of living and crime is under control, we have a great educational system and lots of land.”

He indicated how these factors are a boon for new employers, such as the Southern company that NEDCO worked with, which is expanding into Plattsmouth.

“And there is an untapped resource in Nebraska for equestrian and rodeo events,” Sailors said.

He spoke to the potential presented by University of Nebraska-Lincoln’s investment in equine sciences programs, and their role in helping to position the state as the “Rodeo Capital of the World.”

“The high school rodeo championships were here last summer,” Sailors recalled. “The revenue was the equivalent of four home Husker games in six days.”

A Brighter 2022 and Beyond

John Losito’s Sun Valley Lanes & Games represents a member of Nebraska’s entertainment sector, as well as among those “funded loans” powered in partnership with NEDCO and participating banks.

Losito’s history with NEDCO can be traced back to the recovery following the Great Recession.

“When I went to purchase the place, my bank said we’re going to finance part of this with the SBA,” he said.

Losito encouraged having good records, and to avoid “shortcuts.”

“They will come back and bite you in the long run when you try to get financing,” he said. “I am very firm with the belief that your business is what is valued on paper and that comes from reporting all income. The pandemic was proof of that.”

He referred to the likes of people failing to report all tips.

“I’m very good about doing everything digitally,” Losito said as it relates to appropriate documentation.

The need for an expanded and renovated home for Sun Valley was further helped along by historical precedent; he considered what has happened following other dire events in history, no less the truly unprecedented flu epidemic of 1918.

“People think, ‘We’ve survived this,’ and now they want to enjoy life,” he said. “That’s what has happened.”

In fact, Losito recalled when the bowling alley and entertainment center first reopened, the long-term customers immediately flocked to the new space.

It helps, Losito added, that there is sufficient space to spread out when dealing with COVID-19.

“The issue everyone is facing is staffing,” he said.

Losito summarized the situation best by saying: “We’re not broken down on the side of the road, but we’re not moving on all cylinders, either.”

In fact, it’s a situation that is driving potential investments in innovative technologies; for example, he referred to looking into kiosks to free up staff members’ time.

“It’s a strange situation to be in,” Losito said. “A lot of people have money to spend. But you don’t want to overload the staff. They are critical to my success.”

With so many loan programs available to businesses, Unisell Auto’s Usmanov said, finding the right banker or contacting NEDCO directly and expressing one’s business needs “would be a good step forward.”

“I personally wouldn’t own a commercial building if it wasn’t for the NEDCO loan program that gave me this opportunity,” he said.

402-483-4600 • 4445 S. 86th St., Suite 200, Lincoln 68526 • nedcoloans.org