Capital ideas: SBA, banks angle to land small-business borrowers.

• Author: Stokes, Jeanie
• Position: Small Business Administration

Tim Patterson, co-owner of RIGS Fly Shop & Guide Service in Ridgeway, says his five-year old outfitting business is growing, and that means he needs more capital. He and partner Bill Sheppard are "just a couple of fishing-and-rafting guys" whose company has grown from a tackle shop and fishing-guide service to a business with 18 seasonal employees offering rafting and fishing trips on the Gunnison and Uncompahgre rivers. The "fly fishing somewhat maintains itself, "Patterson says, but he adds, "now we're getting into the rafting business, and with that comes a need for transportation, vehicles, trailers and rafting gear itself."

Given that much of RIGS' business takes place over a relatively short summer season, how to finance expansion over a longer period of time is an issue. Patterson and Sheppard have been through several tiers of financing, starting with a large revolving line of credit that has since been replaced by a second line. Credit cards also have provided short-term financing, but Patterson would like to combine his several sources of funding into one large loan. "We'd really love to be under one single lender," Patterson said, "but that's difficult to find."

Patterson's problem is not only endemic to many different kinds of businesses outside the metro-Denver area of Colorado, but it is representative of an issue that marks the leading edge of banking competition in the region.

It also is a national issue. It involves the federal government through the Small Business Administration because SBA-guaranteed loans are one venue for banks to compete for the small-business lending market. And it involves large national banks and credit-card issuers, which, ever since bankruptcy reform laws were passed by Congress in 2005, have been stepping up their own small-business-finance marketing efforts to reach what they perceive is a lucrative market. As usual, the small-business owner is left to sift through a variety of sometimes-complicated options, in hopes of picking the best financing venue for his or her business.

Small business has begun to sizzle again in Colorado, and business lenders say they are hearing from both start-ups and existing businesses needing to expand. The state lost approximately 100,000 jobs between the first quarter 2001 and third quarter 2003, representing about 4.5 percent of Colorado's non-farm employment base. Most of those jobs have been recovered, thanks to small businesses. The Federal Deposit Insurance...