Backing vets; SBA loans are giving patriots a helping hand.

Byline: Warren Allen

Christopher G. Ceddia was fresh out of Northeastern University in 1991 with a degree in engineering and a lot of bills.

Mr. Ceddia enlisted in the U.S. Navy. He served 16 months during the Gulf War, and developed skills in computer and communications equipment while attached to the staff of the Commander of the U.S. Naval Forces Central Command stationed in Bahrain.

Today, Mr. Ceddia lives in Hopkinton and works as vice president for Security Construction Services Inc., a Hudson-based federal contractor that manages construction projects and operates a security fence division that sets up everything from simple residential enclosures to crash-barrier, anti-terrorist fencing.

His wife, Janet B. Ceddia, owns the company. The two have worked side by side since they established Security Construction Services in 2002. Over that time, the company has grown, thanks to its status as a certified woman-owned and disadvantaged business.

But the Ceddias worried about whether they could afford to make their company grow without overextending themselves.

Yet 17 years after Mr. Ceddia enlisted, he found his military service opening up new possibilities for his business. Through the U.S. Small Business Administration's Patriot Express Pilot Loan Initiative and with the help of an SBA liaison and Middlesex Savings Bank Vice President Meghan Liddy, the Ceddias were able to quickly secure a Patriot Express loan with a copy of Mr. Ceddia's discharge papers and company records, tax returns and financial statements.

"It was one of the easiest banking situations I've ever encountered," he said. "I've never seen anything like it. It was flawlessly smooth."

Established a year ago, the Patriot Express program helps veterans who are either starting or trying to build up a small business. The loans feature fast approval and amounts of up to $500,000 from voluntary lenders. Eligible are veterans, service-disabled veterans, active duty service members participating in the military's Transition Assistance Program, Reservists and National Guard members, their current spouses as well as the widowed spouse of a service member or veteran who died during service or of a service-connected disability.

"First and foremost, it's given me peace of mind," said Mrs. Ceddia, "because I know I can continue to grow without running out of cash. That's the challenge with growth - it takes money. And so, it's given me a ton of peace of mind. I'm sure it's given me an edge on the competition that doesn't have access to that kind of capital."

The Ceddias were able to approach Middlesex Savings Bank in Natick with a business on the rise. In 2007, Security Construction Services doubled its revenue from the prior year to just over $8 million, with an additional $10 million in government contracts awarded but work not yet begun.

Through Patriot Express, they were able to secure a $350,000 line of credit. This reassured them that they would be able to handle the strains of a growing company that is expected to do $15 million in revenue by the end of 2008. Mrs. Ceddia said they will be able to pay subcontractors even when Security Construction Services hasn't yet received payment for a job. With these funds, they hope to keep business relationships strong.

Since the program was initiated, Patriot Express has closed more than 1,500 loans and loaned more than $150 million. The loans can take as little as a day or two to process, though there have been reports of some taking weeks. The average size of a loan is around $100,000.

"Not everybody is going to qualify," said Louis J. Celli Jr., chief executive officer of the Northeast Veterans Business Resource Center, which helps veterans through the ups and downs of creating their own business. "That's what people need to understand. There is no program out there to give out free money for starting businesses."

Part of the reason banks are willing to make these loans is that the SBA promises to back high percentages of the investment. The SBA guarantees up to 85 percent for loans of $150,000 or less and 75 percent for loans of $150,000 to $500,000. But before banks will make any investment, they need to see a solid business plan, and this is particularly true given today's economy.

Steve Mackowitz, vice president of Digital Federal Credit Union in Marlboro, said his organization had received just three inquiries about Patriot Express loans, but none were pursued. They were primarily people curious about starting their own businesses, but for whatever reason, never went ahead with it.

"Giving out loans for startup businesses is always difficult," said Mr. Mackowitz. "I don't know the exact number, but over 50 percent of businesses fail in the first year. You really still have to qualify. Lenders are not just going to give borrowers a loan because the government guarantees it. It still has to make sense. That's my guess why I haven't heard much about it - people are just not qualifying for it."

Mr. Celli pointed out that Patriot Express loans represent a real opportunity for veterans. With the SBA covering most of banks' liability, he said, the loans represent a growing trend of the government encouraging lenders to court current and former military members. But he stressed that Patriot Express is still a business loan, and anyone looking to receive money must approach banks with a sound business plan in hand.

"The bank isn't going to want to give you money to bail yourself out. They're going to want to give money to a business who can demonstrate that the money they receive is going to take that business to the next level. And that's really with any lender."

With their growing business, the Ceddias fit that description. But they didn't know about the Patriot Express program when they first started talking to banks. They were initially interested in refinancing some SBA loans left over from when they first acquired their business. It was only through the process of consulting with multiple banks that they learned about Patriot Express.

But the ease with which the loan was made, and the peace of mind that they now have about their company's future, have left Chris Ceddia hopeful about the future of other veterans' small businesses.

"I think the SBA has come under fire a little bit because of their aversion to giving women certain contracts and things of that nature," he said, "and I think this program that they've put together will allow a lot of female - and really all veterans - to be able to access funds and capital to start their own companies. I just think it's a great program."

Patriot Loan Express

What: Loan program for military community and spouses

Launched: June 2007

Sponsor: U.S. Small Business Administration

Total loans and loan volume to date: 1,500 loans valued at $150 million

Maximum loan amount: $500,000

SBA guaranty: 85% for loan amounts up to $150,000, then 75% from $150,000 to $500,000

Interest rate: 2.25% over prime to 4.75% over prime, depending on loan size and maturity

Participating area banks: Athol Savings Bank; Digital Federal Credit Union; Flagship Bank & Trust; TD Banknorth; Webster Five Cents Savings Bank; Middlesex Savings Bank

Web site: http://www.sba.gov/patriotexpress/

Source: U.S. Small Business Administration

Veteran status

Worcester County communities with more than 15% civilian veterans

Athol 16.4%

Auburn 17.5%

East Brookfield 15.9%

Gardner 16.4%

New Braintree 15.2%

North Brookfield 17.2%

Oakham 18.1%

Petersham 17.8%

Royalston 16.3%

Spencer 15%

Warren 16.2%

Webster 15.5%

West Brookfield 15.1%

Worcester County 12.7%

Massachusetts 11.5%

Source: 2000 Census

ART: PHOTO

CUTLINE: From left, Security Construction Services co-owners Christopher and Janet Ceddia, with their banker, Meghan Liddy, of Middlesex Savings Bank. They are shown in the Hudson company's shop, with woodworker Eduardo Becker in the background.

PHOTOG: T&G Staff/PAUL KAPTEYN