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Small-business loans increase despite loss of major lenders

The size and quantity of small-business loans are continuing to grow in central Pennsylvania, squashing fears that lending programs would suffer after the region lost Metro and Susquehanna banks.

The U.S. Small Business Administration’s central Pennsylvania region, in fact, backed a record number of dollars through its SBA 7(a) program for the fiscal year running from Oct. 1, 2015 and Sept. 30, 2016. The number of loans and average size of the loans also increased over last year.

The region includes Cumberland, Dauphin, Lancaster, Lebanon, York and nine other counties.

Antonio Leta, the administration’s director for eastern Pennsylvania, credits the growth to new technologies that make SBA lending easier for banks, as well as good old boots-on-the-ground outreach.

“We were very excited about all our efforts for the year,” he said.

The SBA 7(a) program, the administration’s most commonly used offering, helps new and expanding businesses access loans that banks and credit unions might not otherwise grant. The government backs most of the loan, lowering the risk for the financial institution.

Officials feared the program would suffer after some local banks providing SBA loans – notably Metro and Susquehanna – were absorbed by out-of-market competitors First National Bank and BB&T.

Those concerns, however, turned out to be mostly unwarranted.

The lending agency benefited from technology that rolled out in early 2016 that lets lenders complete SBA loan paperwork electronically, Leta said. The eastern Pennsylvania region – which includes 40 counties, including central Pennsylvania – was one of the first in the country to test and adopt the program.

The district also ramped up its outreach efforts over the past year, Leta said, knocking on the doors of banks and credit unions to let them know the benefits of doing SBA loans.

The efforts seem to have worked.

Some banks seem to have taken advantage of the loss of Susquehanna and Metro to beef up their own SBA numbers. Already-large lenders like Wells Fargo and M&T, for example, were more active this year.

Lower Paxton Township-based Centric Bank led the eastern region this year in total dollar amount of SBA loans made. It also increased its number of SBA 7(a) loans in eastern Pennsylvania from 18 in 2014-15 to 50 in 2015-16.

The growth was mostly linked to the opening of Centric’s Doylestown lending office in April 2015 – although the new technology and newly available customers certainly didn’t hurt, said Centric CEO Patti Husic.

SBA loans are a core piece of Centric’s business, Husic said. She views them as a win-win: they create business for the bank and help put small business into communities.

SBA lending still has room to grow in central Pennsylvania. First National Bank, for example, made fewer loans than Metro did before the acquisition. Still, Leta believes First National is on-track to reach that level in the coming years as it continues to settle into the area.

The upswing in the region’s loan numbers bodes well for small-business owners, Leta said. The jump from 252 loans backed in central Pennsylvania during the 2014-2015 fiscal year to 324 in 2015-2016 means more business owners are gaining access to money they might not otherwise be able to obtain.

“Really that’s what the program is all about,” he said.

By the numbers

Financial institutions in the Small Business Administration’s central Pennsylvania region made:

  • 324 SBA 7(a) loans between Oct. 1, 2015 and Sept. 30, 2016, a 28 percent increase over last year.
  • These loans totaled more than $108 million, 53 percent more than the 2014-2015 fiscal year.
  • The average loan amount also increased, from roughly $280,000 to $333,000.
  • Centric Bank led the eastern region in terms of dollars loaned through the SBA program, having lent more than $38 million in the 2015-2016 fiscal year.

Jennifer Wentz
Jennifer Wentz covers Lancaster County, York County, financial services, taxation and legal services. Have a tip or question for her? Email her at [email protected].

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