A key small-business loan program backed by the federal government is generating more activity, albeit in smaller dollar amounts.
A total of 71 of the Small Business Administration’s 7(a) loans were approved in June in the Buffalo-Rochester market, up 13 percent from 63 a year ago, according to SBA.
“We’re on the right track,” said Franklin J. Sciortino, the SBA’s district director.
The SBA’s statistics showed that while the number of recipients climbed, the total dollar value of those loans continued to lag. The combined value of the June loans was $10.6 million, down 25 percent from $14.2 million a year ago.
An SBA policy change a few months ago seems to have contributed to both trends. The agency eliminated fees on SBA-backed loans of $150,000 or less, which could be attracting more customers who are applying for smaller loans.
Sciortino said the pickup in the number of loans is noteworthy. “The more loans you can make, the more small businesses you’re helping,” he said. “I’m really encouraged that it’s going to continue for our last quarter” of the fiscal year.
The SBA program overcame a rough start, hindered by the partial government shutdown last October – when the current fiscal year began – followed by a harsh winter that seemed to impede activity at the start of 2014.
Buffalo-based M&T Bank was the leader in loans and volume for June, with 24 loans and volume of $2.2 million.
Under the program, the government provides guarantees for up to 85 percent of the principal amount of a loan. It is designed to help small businesses that might otherwise have trouble getting a loan, by giving banks more confidence to the lend to them.
For the first nine months of the fiscal year, total dollar volume was $87 million, down from $101.2 million in the same period a year ago. Meanwhile, the number of loans was 519, which was up 16 loans from the same period in 2013.
M&T led in both categories for the first nine months of the fiscal year, followed by Buffalo-based First Niagara Financial Group.
A total of 31 institutions are participating in the SBA program in the current fiscal year, compared to 28 at this time last year. Lyons National Bank, based in Wyoming County, has significantly increased its activity, with 21 loans in the first nine months of the fiscal year, compared to just nine during the same span a year ago.