Adding up - Westfair Communications

Hudson Valley Bank led all Westchester County-based banks in small-business lending in 2004, a new report shows, with the Yonkers institution issuing 385 loans worth $98 million that year.

It was a small portion of the $14.4 billion New York”™s 40 most active banks and credit card companies loaned to 490,000 small businesses statewide, according to the U.S. Small Business Administration (SBA). But with small businesses a critical part of the local economy, Hudson Valley Bank”™s focus on the sector plays an important factor.

With the SBA counting 1.9 million small businesses statewide, roughly one in four established a credit line in 2004, both bank loans and credit cards, which the SBA said are increasing at a faster rate.

The small-business sector is critical to the New York economy, accounting for more than 7.5 million jobs statewide at last count.

Comparisons to previous years are difficult because the SBA has broadened its criteria this year for what banks it includes in its analysis, adding savings banks and savings and loan institutions, which it says are an important source of credit for small businesses.

The SBA defines a small-business loan at between $100,000 and $1 million, and a micro-loan for smaller amounts, largely generated by credit cards for businesses.

New York numbers among the 10 states with the lowest level of small-business loans, as measured on a per capita basis by CFED, a Washington, D.C., group that measures economic trends. In 2003, the most recent year on record, loans to small businesses totaled $1,423 for each resident, behind Pennsylvania and New Jersey, which had totals of $1,604 and $1,510, respectively.

Alabama led the nation with $2,791 in small-business loans on a per capita basis; Connecticut was rock bottom at $847.

While small businesses improved their bottom line in 2005 by 6.3 percent according to the SBA, in a March assessment of the economy the Federal Reserve Bank of New York indicated that a substantial percentage of bankers report tightened standards for all categories of credit. That was particularly the case for commercial mortgages, though the Fed added that there has been no change in delinquencies on commercial and industrial loans.

The New York Business Development Corp., which structures SBA-backed loans meant to encourage bank lending in times of tighter credit, reported an increase in such loans in February from January and the fourth quarter of 2006.

JPMorgan Chase was the runaway leader in small-business lending in New York, totaling 80,000 loans worth $3.4 billion, two-thirds of them classified as micro-loans and generated largely by business credit cards.

While Citigroup issued more credit lines at 83,500, it loaned just under half the amount of JP Morgan Chase.

Among independent banks in the lower Hudson Valley, Montebello-based Provident Bank was the next most aggressive lender, making 626 loans totaling $$75 million.

Nationally, lending to small businesses was up as of June 2005, as banks extended an additional $24 billion in small loans, a 4.1 percent increase from the year before. The rate of growth slowed however.

While the number of credit cards shot up nationally due to aggressive marketing by lenders, actual dollar amounts crept up negligibly as borrowers tempered their demand in a slowing economy.

Utah-based American Express Bank FSB was the top small-business lender in the nation.