For the third straight year, Webster Financial Corp. generated the highest number of loans in Connecticut guaranteed by the Small Business Administration, including under SBA”™s short-lived ARC stimulus loan program for businesses under duress.
As measured by dollar volume, People”™s United Financial Inc. was the top SBA lender in Connecticut for the fiscal year ending Sept. 30, with statewide lending up by more than a quarter as Congress authorized SBA to waive fees and increase loan guarantees, among other measures.
Despite the changes, total lending in Connecticut remained well below the levels at the height of the last economic cycle in 2006, when Citizens Bank and Bank of America Corp. alone issued as many SBA loans as were extended this past year by every bank in the state.
For the fiscal year ending Sept. 30, Waterbury-based Webster Bank issued nearly 60 SBA loans worth nearly $10.7 million. Those totals do not include $6 million more chipped in by Webster Bank alongside SBA loans extended by non-profit community development funds like the Danbury-based Housatonic Industrial Development Corp., or the Hamden-based Connecticut Community Investment Corp. that likewise lends in Fairfield County.
Webster Bank also issued more than double the number of loans of any other lender under the America”™s Recovery Capital loan program, with ARC designed to assist viable but struggling small businesses with debt repayment. Launched in June 2009, ARC reached its end last month, with SBA approving some 8,900 loans worth $287 million under the program. For its part, Webster Bank issued 18 ARC loans of 65 in Connecticut ”“ a perhaps surprisingly low number given the number of small businesses that struggled for cash flow and sources of credit during the recession.
“It wasn”™t for a lack of interest ”“ it”™s just that we had sufficient programs already in place,” said Frank Celentano Jr., regional manager for business and professional banking at Webster Bank. “We did talk it up.”
100 more loans awarded in 2010
In all in Connecticut, more than 65 banks and community investment funds extended $162 million via some 675 SBA loans in fiscal 2010 ”“ a net increase of 100 loans from fiscal 2009 that added $34 million in capital to the economy.
Separately, SBA issued a record $3 million in disaster loans to Connecticut businesses to cover the costs of recovery from a series of damaging storms.
SBA issued guarantees nationally on nearly 55,000 loans totaling $22 billion, up 14 percent and 29 percent, respectively, from fiscal 2009. November 2009 represented the highest single month in loan volume SBA has seen since 2002.
Gains come on fee cuts, higher loan guarantees
SBA Administrator Karen Mills attributed the gains to fee reductions and higher loan guarantees authorized under the American Recovery and Reinvestment Act. Under the stimulus, guarantees on 7(a) working capital loans rose from 75 percent of the principal to 90 percent, while fees were waived both on 7(a) loans and larger 504 loans used for capital equipment and real estate investments.
The Small Business Jobs and Credit Act passed in late September extends those provisions, while permanently increasing loan limits and expanding SBA”™s trade and export finance programs. In short, it adds up to an additional $14 billion of lending capacity SBA otherwise would not have.
The law increases the cap on the streamlined SBA Express loan program from $350,000 to $1 million, and SBA has permanently increased 7(a) loan and 504 limits from $2 million to $5 million. The maximum for International Trade and Export Working Capital loans was raised also from $2 million to $5 million.
The elimination of those fees saved Connecticut businesses more than $4.8 million, according to Jeanne Hulit, SBA New England regional administrator.
“One of the better (incentives), and we hope it stays, is the fee elimination that runs through the end of the year,” Celentano said. “With the elimination of those fees, (customers) are more engaged in the program.”
