Statewide small-business loan activity down for year
Two local banks were among the most active small-business lenders during the recent fiscal year, according to the Small Business Administration.
The administration examined participation in its 7(a) loan program in the 11-county Capital Region, and announced the top lenders for three categories of banks Monday. Under the program, the SBA backs financing from commercial lenders that agree to SBA requirements, thereby absorbing some of the risk.
Glens Falls National Bank & Trust Co. had the highest dollar amount of SBA loan approvals among large community lenders; it also increased its own SBA lending activity for the fiscal year that ended Sept. 30.
Saratoga Springs-based Adirondack Trust Co. held the same distinction among small community lenders. The New York Business Development Corp., headquartered in Albany, was the region's top large-bank lender.
Bernard J. Paprocki, director of SBA's Syracuse District, which includes the Capital Region, said recognizing banks that are extending credit to small businesses is important in this economic climate.
Overall, the volume of SBA loans was down for the year on the national, state and regional levels. Paprocki said small-business loans for start-ups and existing firms "virtually dried up" in February due to the recession.
In New York, the number of SBA loans dropped 52 percent in the fiscal year to 2,426; the total dollar amount of those loans declined a lesser 29 percent to $415 million.
In the Syracuse district, which covers 34 counties including the Capital Region, the number of loans dropped 12 percent for the year, and more of those loans went to existing businesses than start-ups; the dollar amount was down only 4 percent.
Paprocki said that locally, community and regional banks were responsible for much of the small-business lending, as multi-state or multi-national banks cut back on that segment because of risk.
"I think smaller community lenders, regional lenders, tended to have less of a problem lending money due to the fact that they understood their customer more," Paprocki said.
The president and chief executive officer at Adirondack Trust Co. agreed.
"The problems with the banking sector were generally caused by people who did not know who they were doing business with," said Charles V. Wait. "We know the people, and that's the model that everybody realizes that works now."
Adirondack Trust Co. outperformed all other small community lenders by more than doubling its number and dollar amount of SBA loans for the year. Adirondack Trust approved 25 loans worth $2.39 million in the Capital Region.
This is the ninth consecutive year the bank has topped the small community lender list in the Capital Region.
Glens Falls National Bank & Trust Co. was the top large community lender for the year. The bank made eight loans worth $1.51 million to start-up and existing businesses, representing a 33 percent increase in number and 74 percent increase in dollar amount over the 2008 fiscal year.
Tom Hoy, president and chief executive at Glens Falls National Bank, said the institution has a long history of working with the Small Business Administration, but didn't set any specific goals of boosting participation.
"You still have to have a credit-worthy situation where the loan will make sense," Hoy said.
The 7(a) program is the administration's most flexible loan. It guarantees financing for start-up and existing small businesses, and can be used for working capital, machinery and equipment, furniture and fixtures, land purchase, building construction, leasehold improvements and some debt refinancing.
The SBA's Capital Region spans Albany, Clinton, Columbia, Essex, Greene, Rensselaer, Saratoga, Schenectady, Schoharie, Warren and Washington counties.
Posted in Local on Monday, November 9, 2009 5:20 pm
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