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M&T Bank Corp. remains the region’s leader in a government-guaranteed loan program aimed at small businesses, but First Niagara Financial Group has grabbed the No. 2 spot.

M&T made 206 loans in the Buffalo and Rochester market under the Small Business Administration’s core 7(a) loan program from last October – which was the start of the federal fiscal year – through June. Buffalo-based M&T’s loans added up to $38.8 million.

Under the SBA’s 7(a) program, the government provides guarantees for up to 85 percent of the principal amount of a loan. The program’s statistics offer a window into which institutions are most active in it, as well as the amount of demand generated by small businesses.

Overall, 28 institutions in Buffalo and Rochester have originated 503 7(a) loans worth $101.2 million since last October, the SBA said. The number of loans increased 10 percent from the same period a year ago, and the combined dollar value was up 42.5 percent.

“I think it’s the confidence of the businesses overall and that the economy is looking better,” said Franklin J. Sciortino, director of the SBA’s Western New York district office. As those businesses feel more confident, he said, they are more willing to take steps to grow their businesses and apply for loans to support those plans.

M&T retained its position as the clear No. 1 lender in the Buffalo-Rochester market under the program during the current federal fiscal year. But Buffalo-based First Niagara moved past Five Star Bank into the No. 2 spot. First Niagara over the past nine months approved 77 loans for $10.6 million.

“The branch network has really focused on small-business lending,” said Janell Andersen, First Niagara’s SBA relationship manager.

The 7(a) program often is an avenue for applicants that are start-ups, have undergone an ownership change or are relying on projections, she said.

As for First Niagara moving up to the No. 2 spot, Andersen said: “We’re competitive, and we’re definitely serving the community where we do business.”

Five Star, whose parent company is Warsaw-based Financial Institutions, has approved 69 7(a) loans in the past nine months, for $9.8 million. Hamburg-based Evans Bancorp was fourth on the list, with 28 loans for $7.6 million, followed by KeyBank’s 25 loans for $3.6 million. M&T remained the dominant player in the program. The bank accounted for 41 percent of all the 7(a) loans in the Buffalo and Rochester markets from last October through June, and dollarwise, it accounted for 38 percent of the total.

While the SBA results for Buffalo and Rochester have improved, the National Federation of Independent Business said small-business optimism as measured by its own index “remained in tepid territory” last month. The federation said job creation plans increased slightly in June, but “expectations for improved business conditions remained negative.”

email: mglynn@buffnews.com