Since Connecticut became a major lender to small businesses in the past year, bank loans backed by the Small Business Administration have dropped significantly, as the state ”“ rather than the federal government ”“ shoulders some of the risk of small business loans here.
Under SBA”™s most widely used 7(a) Loan Guaranty Program, banks statewide issued 500 loans for $152 million in capital for the 2012 fiscal year ending in September. In fiscal 2011, with several new SBA measures taking effect in the wake of the federal stimulus, SBA 7(a) loans peaked above 600 in total for $172 million.
Also down significantly were loans under SBA”™s 504 program for financing real estate and fixed capital investments, with under 68 loans putting $33 million onto the street this year, against 84 a year earlier to the tune of $45 million.
Even micro loans backed by the SBA lost steam.
Just one year ago, SBA lending at spiked 40 percent in Connecticut as the Obama administration sweetened guarantees and cut fees in a bid to boost the deal pipeline.
Entering 2012, Gov. Dannel P. Malloy introduced the Small Business Express Program (EXP), offering loans to some companies that might ordinarily have difficulty getting them in the current market.
Malloy has consistently touted the program as creating a needed spigot of financing for small businesses. Still, it appears the program may have siphoned off some loans onto the state”™s risk profile that otherwise would have been covered by the private sector in partnership with the federal government.
To date, EXP has extended financing to more than 300 businesses, having received 1,400 applications.
“We may have seen some smaller loans we would normally see financed under an SBA guarantee (that) got financed by the state of Connecticut,” said Bernard Sweeney, director of Connecticut”™s SBA office. “But we ”“ (the) state and SBA ”“ look at it as ”˜the small business got financed,”™ whether by the state of Connecticut under the governor”™s Small Business Loan Express or under an SBA loan program. We work together on providing access to capital to all small businesses in the state.”
Newcomer First Niagara Financial Group Inc. was the only major SBA lender in Connecticut to significantly increase its lending under the 7(a) program, as ranked by both loans and dollar amounts, finishing the year as the third largest SBA lender under the agency”™s 7(a) working capital loan program.
Farmington Bank increased its own SBA 7(a) lending to 57 loans totaling $8.6 million, passing Waterbury-based Webster Financial Inc. which underwrote 50 loans for $12.5 million in capital.
Bridgeport-based People”™s United Financial Inc. and New York City-based JPMorgan Chase & Co. rounded out the top five lenders.
After ranking among the top five banks last year, Fairfield County Bank sharply scaled back its SBA lending in the past year, with the Ridgefield-based bank reporting just six loans under the 7(a) program totaling $1.2 million, versus nearly 40 a year earlier for $5.3 million. Newtown Savings Bank is now the most-active SBA lender among Fairfield County community banks, despite a significant drop in its own lending totals.
”“ Jennifer Bissell contributed to this report.
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