Among locally based banks, People”™s United Financial Inc. was the most aggressive lender to small businesses in Fairfield County last year, according to an annual study by the U.S. Small Business Administration, and tied with four smaller banks for the top SBA rating in Connecticut.
The revelation came even as the SBA gave guidelines on how banks can issue “America”™s Recovery Capital” (ARC) loans, under which small businesses that have been operating at least two years can borrow up to $35,000 to help them refinance existing debt, including making credit card payments. Applicants must be able to demonstrate that they are running a viable business that is nevertheless experiencing hardship in the recession.
SBA assesses lenders annually on their small business and microlending, both in terms of the number and amount of loans they issue as well as by a ratio of small business loans to assets and total commercial loans. Under SBA guidelines, small business loans can amount to up to $1 million, while microloans are capped at $100,000.
As of June 2008, People”™s United had 14,000 business loans of less than $1 million outstanding for a total of $2.2 billion, or just over $150,000 each on average. The bank jumped from the 13th rung on the SBA survey of nearly 60 banks in Connecticut to finish among the top five on this year”™s survey.
Since residential lending froze early in 2008, Bridgeport-based People”™s United has been increasing its commercial lending, even as many banks nationally pulled back. The Bridgeport-based bank”™s market capitalization in May vaulted it into the dozen largest in the industry.
“Over the past few years we elected not to sacrifice credit quality,” said Philip Sherringham, speaking at the company”™s annual meeting last month. “As a result, we grew at a slower rate than our peers ”“ particularly in the commercial banking area ”“ but today continue to enjoy much lower levels of net charge-offs.”
Westport-based Connecticut Community Bank N.A. had small business loans outstanding equal to 27 percent of its assets, the highest percentage of any Fairfield County-based bank. Connecticut Community Bank owns Darien Bank & Trust, Greenwich Bank & Trust, Stamford Bank & Trust and Westport National Bank.
Waterbury-based Webster Financial Corp. was the only other bank on the SBA survey with a comparable level of small business lending activity in Connecticut, reporting nearly 32,000 small business loans worth an aggregate $18 billion. From a ranking among the top 10 in Connecticut last year across all small business loan criteria, Webster Bank dropped to 20th this year. In microbusiness lending, the bank was the No. 2-ranked lender, however, and counting loans in other jurisdictions Webster Bank was ranked the 17th top small business lender in the United States among large institutions, with People”™s Bank ranked 24th.
The Connecticut survey did not include Bank of America Corp., Wachovia (now owned by Wells Fargo) and several other large banks based elsewhere that do business here; and did not include the GE Money division of Fairfield-based General Electric Co., a prominent credit-card issuer. GE Money was ranked in the top 60 nationally, with American Express Co. the top small business lender in the country.
Nationwide, banks issued 23 percent fewer loans valued between $100,000 and $1 million between fiscal 2007 and 2008, though the total value of such loans rose slightly. Including microloans, small-business lending increased 4 percent over that span, half the increase of the year before.
Loans valued in excess of $1 million increased 12 percent during the interval, a slight gain from the previous year.
