Business Lending Guide 2015: Big banks still lend small

The common perception is that smaller community banks are friendlier to small-business owners and entrepreneurs.

But large, national banks are challenging that perception, at least in Central Pennsylvania. In this region, bigger banks did a bigger share of lending through the U.S. Small Business Administration in its fiscal year 2014 — which started Oct. 1, 2013 — than in 2013, according to figures from the SBA.

Officials from larger banks said they’ve been strengthening their focus on SBA loans, with expanded product offerings and larger SBA staffs.

“We have built up a dedicated SBA lending team that works exclusively with small businesses to help them understand which SBA loans might be right for them,” said Quincy Miller, head of business banking for Philadelphia-based Citizens Bank, part of Citizens Financial Group.

As the economy recovered and more companies were looking to grow, Citizens has seen its SBA lending double over the past year, Miller said. The company appeared on the list of top midstate SBA lenders for the first time in years, issuing $3.79 million in 17 SBA loans.

Tony Leta, director for the SBA’s Eastern Pennsylvania district office, said a fee waiver the SBA instituted for its loans about two years ago has helped get larger banks back into SBA lending, but they haven’t taken over in the local district.

“We’re much less concentrated than the rest of the country,” he said. “That tells me there are still community banks that are involved in SBA lending in Pennsylvania.”

Nationally, the top 10 lenders hand out 61 percent of all SBA loans. In the Eastern district of Pennsylvania — which covers 40 counties, including all of the midstate — the top 10 lenders represent 53 percent of the loan unit volume, Leta said.

Leta said high-volume banks have already been active in the SBA’s current fiscal year in loans under $50,000.

M&T has made 84 loans under $50,000 after finalizing 58 in all of the previous fiscal year. Wells Fargo is at 57 so far this fiscal year after having 19 last year, and Citizens is at 33 this year after making 25 all of last fiscal year. Those are the top three lenders in the district for loans under $50,000.

Jim Donovan, business banking manager for M&T Bank’s Pennsylvania region, said he couldn’t speak for any other banks but noted that M&T has been a consistent performer in regional SBA lending.

M&T has handed out the most SBA loans in Pennsylvania’s Eastern district for the last five years, averaging more than 190 loans in that period. No other bank has averaged 100.

“The goal is to be number 1,” he said. “It’s important to us that we’re number 1.”

He also said small-business lending is part of M&T’s overall business plan to improve the communities it inhabits.

“It’s part of a consistent approach to doing good business,” Donovan said. “Small-business lending, and SBA in particular, it cascades down and has an impact on our community. Helping small businesses grow is one tool in our arsenal.”

Jim Malcolm, small-business strategy leader for the Mid-Atlantic at Wells Fargo, said the bank’s small-business lending has increased overall, mostly because of increased demand.

Wells Fargo was the district’s leader in amount of SBA loans handed out in the Eastern district in fiscal year 2013 at $36.7 million. It ranked second in 2014 at $26.8 million.

Wells Fargo offers 82 different loan products for small businesses, and it isn’t all just credit, he said, though that market is picking up.

“You’re seeing that gradual increase in optimism from businesses and people are becoming more comfortable in acquiring credit,” he said. “Businesses are expanding, and they’re looking for credit to purchase an upgraded piece of equipment.” <

Michael Sadowski

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