Webster Financial Corp. became the U.S. Small Business Administration lending leader in Connecticut during the fiscal year ending Sept. 30, as the Waterbury-based company”™s Webster Bank subsidiary made 100 loans for a total of $12.3 million under the mainstay 7(a) program.
Webster was one of the few banks to increase SBA lending this year.
The 7(a) program is intended to provide a credit backstop for banks to loan money to inexperienced entrepreneurs for operating capital.
Webster Bank also led Connecticut in lending under the SBA”™s companion 504 program, intended to help finance long-term capital projects, such as real estate purchases and improvements. Webster Bank made 11 loans for just over $5 million under the 504 program, ahead of Ridgefield-based Fairfield County Bank Corp. and Newtown Savings Bank, which both made 6 loans for $3 million under the 504 program.
Newtown Savings also led all banks based in Fairfield County under the 7(a) program, making 40 loans for nearly $6 million.
Last year in Connecticut, the banks secured SBA guarantees for $183 million across about 800 loans under the 7(a) program, down from $189 million via 1,200 loans in 2007. Nationwide, the number of SBA loans declined 30 percent in fiscal 2008, with total dollars loaned down 11 percent. SBA does not publish county-level data.
The attrition allowed Webster Bank to knock Citizens Bank off the perch, after the Royal Bank of Scotland subsidiary cut its SBA lending in Connecticut by more than half. It marked the first time in five years Citizens Bank has not held the top slot. At deadline, a Citizens spokesman had yet to respond.
No. 2 player Charlotte, N.C.-based Bank of America Corp. also cut SBA lending by more than half. A Bank of America spokeswoman declined comment except to say the company remains committed to the SBA program in all of its markets.
As the two top SBA lenders in 2006 with a combined 600 loans, Citizens Bank and Bank of America made just 130 SBA loans last year.
The numbers are supposed to be headed in the opposite direction, according to the conventional wisdom, which dictates that banks are more likely to seek an SBA guarantee during down economic cycles when loan repayments might be threatened.
Also last year, SBA shortened its application in order to draw in more business from commercial loan officers who might otherwise quail at the due-diligence required for relatively small loans.
Of institutions that execute significant numbers of SBA loans, New Haven-based NewAlliance Bank has been the only one to measurably increase its lending totals the past two years, making nearly 50 loans in fiscal 2008 for $15 million, double its total of 2006.
The Hamden-based Connecticut Community Investment Corp. was the only institution to loan more money than NewAlliance, issuing 35 loans for a combined $17.6 million. CCIC is run as a loan pool for banks doing business locally, including Webster Bank, Bank of America, Citizens Bank, Fairfield County Bank and NewAlliance.