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Scott Lewit won an SBA Award after his company suffered setbacks in the aftermath of 2008's Tropical Storm Fay
President Scott Lewit of Florida-based Compsys, a manufacturer of composite performs, received the U.S. Small Business Administration’s (SBA) 2010 Perseverance Award. According to the SBA, Lewit won the award for his dedication, drive and determination to help Compsys recover from damages of Tropical Storm Fay. During the summer of 2008, Compsys was flooded by the storm and all the company’s equipment, materials and tools damaged under water. Lewit not only stepped in to process the loan papers (something he notes as being very intensive) but also deferred personal pay for a year in order to help the company recover and volunteered to work extra hours and weekend.
Lewit states, “We received great letters from key customers such as Lockheed Martin, Regal, Grady White and Sea Ray for how we handled the problem. From there the SBA nominated and approached us about the award. That means a lot to me because the flood hit us at a bad time, since it coincided with tough economic conditions and a sharp decrease in lending from the banks.”
In reality, Lewit credits the SBA for the company’s ability to get back on its feet. “The SBA disaster relief funding provided the capital we needed—low interest rate loans, not grants—to recover from damages,” he says. “This award really belongs to the hard working folks at the SBA. They are responsive, professional and dedicated to helping companies like ours recover from disasters.”
Yet he also uses the opportunity to highlight and encourage reform in lending regulatory requirements. “Our loan was a direct SBA loan because it was a disaster relief loan,” he says. “Banks issue SBA backed loans that are now guaranteed by the SBA for 90 percent. But even with this, many businesses are finding that SBA lenders are unable to extend loans due to lending guidelines. In other words, banks want to help but are burdened by regulatory requirements such as cash flow and debt/worth. Further, many bankers comment that if these loans were to be funded directly by the SBA as opposed to funded by a bank, that it would create liquidity in the banking system because that money would go into the deposit account of a company. So, I respectfully request the House and Senate to seriously consider direct SBA loans to small business.”
Optimistic that reform is possible, the SBA Office of Advocacy released a study examining the type of credit utilized by small business. Bank Credit, Trade Credit or No Credit: Evidence from the Surveys of Small Business Finances, by Rebel A. Cole, compares firms that use credit (leveraged) with those that do not (unleveraged). The study also looks at which kind of credit leveraged firms’ use–bank credit (loans or lines of credit) trade credit (from suppliers) or both. The study found that the two types of credit (bank credit and trade credit) used by small firms are complements, with many small firms using both types of credit simultaneously.
“Access to credit is one of the most important issues facing small business today” said Acting Chief Counsel for Advocacy Susan Walthall. “A study that provides a better understanding of the credit used by small business is invaluable to policymakers, small business and their suppliers.”
