Cleveland Growth Capital Corp. small business lender will expand its reach in and around Lake County with the acquisition of Small Business Capital Corp. (SBCC) from Ohio to Kirtland.
Growth Capital chairman John Kropf said federal regulators approved the merger, which had been in the works for months, on May 30, adding a Small Business Administration (SBA) 504 loan portfolio of around 20 million dollars in assets. That brings Growth Capital – the fifth largest provider of government-backed SBA loans in Northeast Ohio – to around $ 150 million in assets today.
Founded in 1983, SBCC, like Growth Capital, is an SBA Certified Development Company (CDC). No money is exchanged with the suit, which will effectively dissolve the CCSC.
SBCC was apparently struggling to grow its loan portfolio and had recently experienced some staff turnover.
In April 2018, the group hired Randy Horst, who previously worked with PNC Bank as Head of Credit Risk, as Executive Director. But Horst left that post earlier this year. In light of this, SBCC board chairman Allen Weaver of Erie Bank began to research alternative options for moving forward. Growth Capital’s board of directors unanimously approved the merger, seeing it as the most efficient way to serve its borrowers and the surrounding market.
Borrowers in the larger growth capital market may well benefit from the increased presence of a new agency that already has relationships – or is in the process of forging – with agencies such as the Lake County Ohio Port and Economic Development. Authority, Geauga Growth Partnership Inc., Small Business Development Centers and Lakeland College, among others.
âWhat could have been just this sinking organization is turning into a real opportunity for these small businesses to have access to these types of loan programs that they maybe didn’t have before because (SBCC) was there, âKropf said, noting that while the two entities would have competed for loans, each typically focusing on its own markets in the past.
Consolidation between CDCs has been fairly common over the past decade, as regulatory requirements make it difficult to manage these lending agencies. Smaller organizations have chosen to merge with others because of the challenges of meeting all of the different compliances.
Probably the most recent example of consolidation in Ohio before the Growth Capital and SBCC merger was the merger between HCDC Inc. of Cincinnati and Stark Development Board Finance Corp. of Canton, which took place in July 2017.
Growth Capital, which received a $ 4.7 million loan from Fifth Third Bank last year in support of Community Advantage loans, lent $ 4.3 million on 42 SBA loans during the year 2018 (which ended September 30), according to Crain’s research.