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A small-business lending program backed by the federal government has some catching up to do.

In March, a total of 62 of the Small Business Administration loans, called 7(a) loans, were originated in the Buffalo-Rochester region, three fewer than a year ago, according to the SBA. The total dollar volume of the loans was down 35 percent from a year ago, to $8.2 million.

Through the first half of the federal government’s fiscal year, which began in October, the number of loans was down 5.2 percent, to 307, and the dollar value was down 20 percent, to $55.4 million.

Charles Guarino, senior vice president and director of marketing at Five Star Bank, said bank officials have noted the pattern. “We think it will start to turn around as the weather warms up and the second half gets underway.”

Under the program, the government provides guarantees for up to 85 percent of the loan principal. It is designed to help businesses that might otherwise have difficulty obtaining loans by giving the banks more confidence to lend to them.

M&T Bank led in loans originated under the program in March with 20, which was down two from a year ago. Meanwhile, Five Star Bank led in loan volume, at $2.32 million, which was up 32 percent from the year before. “That’s a sign we feel it’s going to start to turn around,” Guarino said.

Through the first six months, M&T led in both loans and volume among the 24 participating institutions. But the Buffalo-based bank’s numbers in both categories were down from the same period a year ago. Its number of loans declined 17 percent and its dollar volume was down 51 percent.

Alfred F. Luhr III, M&T’s senior vice president for business banking in Buffalo, said a few factors contributed to the drop over the first half of the past fiscal year.

Last year’s figures were “unusually high” because of a number of larger projects that were financed, Luhr said. Four of its loans in the program were funded for more than $1 million each – including one for nearly $5 million – compared to the bank’s average loan size of $130,000.

Luhr said the partial government shutdown in October 2013 also got the program off to a slow start, followed by harsh winter weather that may have slowed some activity.

Even with the decreased amounts, M&T dominated the program, accounting for 34 percent of all the loans during the first six months, and about 23 percent of the total dollar volume.

Luhr said M&T’s pipeline of SBA loans in progress is “healthy,” and he pointed to Buffalo-area developments that are expected to stimulate opportunities for its small-business customers.

He noted that in the Buffalo area in particular, M&T closed 17 loans in March for $1.9 million, compared to 14 loans for $1.4 million a year ago.

First Niagara Financial Group saw its numbers go up in the Buffalo-Rochester region in the first half of the fiscal year.

It had 50 loans compared to 38 a year ago, and its volume was $9.8 million, up from $5.3 million a year ago. “We’re looking to improve on that,” said Christopher Earle, first vice president and SBA team leader at First Niagara. In both loans and volume, the bank ranked No. 2 in the market behind M&T.

Earle said the results reflected First Niagara’s ongoing efforts to reach out to customers to use the SBA program. And the numbers have been strong across its footprint, not just in the Buffalo-Rochester region, he said.

Among the reasons customers are seeking the loans are for working capital and business expansions, Earle said.

While Evans Bank’s loan volume under the program was up for the first half of the fiscal year, to $2.4 million, its number of loans was down by seven, to 13.

John Eagleton, Evans’ chief lending officer, said the approval process for the SBA loans is more cumbersome than it used to be, which has slowed some approvals. “It has nothing to do with the local SBA leadership,” he added.

And Eagleton noted that some companies don’t necessarily need to go through the SBA program for a loan. “We are generally seeing although the economy isn’t growing tremendously, the companies that have viable products and are working hard are strengthening their balance sheets,” he said.

email: mglynn@buffnews.com