SBA loan program makes big impact for small businesses

M&T Bank remained the region’s leader in a prominent small-business lending program backed by the federal government.

For many small businesses, the Small Business Administration’s flagship 7(a) loan program is a way to get financed when other options are not available to them.

In the Buffalo-Rochester region, M&T led in both 7(a) loan units and dollar volume for the fiscal year ending Sept. 30. The number of 7(a) loans M&T approved increased 10% from the previous year, to 184, but its dollar volume dropped 4.4%, to $32.8 million.

“We are most interested in the number of [loan] units,” said Christina Brozyna, M&T’s head of business banking sales and operations. “The dollars sort of follow.”

When M&T approves more 7(a) low-interest loans for microbusinesses, that can drive down the average loan size, Brozyna said. “We see that as a very successful year, because we put more money in the hands of more prospective businesses.”

Small businesses use 7(a) loans for all kinds of purposes, including working capital, buying equipment, and making acquisitions. The SBA guarantees 85% of 7(a) loans of up to $150,000, and 75% for loans above $150,000.

“It allows us to take more risks than we would be able to take without the government backing,” Brozyna said.

Cleveland-based KeyBank, which counts Buffalo as its No. 2 market, was second in 7(a) loans in the Buffalo-Rochester market, with 70. Its dollar volume increased slightly from a year ago, to $7.9 million.

Key has put a lot of emphasis on connecting with businesses that need smaller loans, said Tara Lester, Key’s SBA relationship manager for Western and Central New York.

Even loans for just $10,000 or $50,000 can be crucial to helping a small business get off the ground, and laying the foundation for bigger things, Lester said. “When you can start with a small business when they’re starting and later watch them buy a building or buy another business, how rewarding is that?”

Many of the applicants for 7(a) loans that M&T works with have been in business for less than two years, Brozyna said. They are often in seasonal or high-risk industries, with a lack of collateral.

A brewery, for instance, might need to make a lot of up-front investment in equipment. The terms of 7(a) loans help small businesses can work in their favor.

“It just allows them to have the payments spread out for a longer period,” Brozyna said. “The income might not come as fast as the investment.”

In the Buffalo-Rochester market, 37 lenders participated in the 7(a) program in the past fiscal year; some of those lenders were from outside the local market. The total was up from 34 lenders the year before.

In the past fiscal year, 498 7(a) loans were approved in the Buffalo-Rochester market, worth $119 million, compared to 429 loans for $108 million a year earlier.

Both M&T and Key rank among the top banks in the nation in 7(a) lending. Brozyna and Lester see great value to participating in the program year after year, and dedicating personnel to it. With that consistency, the banks keep current on changes in the program, and give guidance to small businesses along the way. 

“We have seen banks be in SBA, out of SBA, sort of back and forth,” Brozyna said. “We felt like if we’re going to commit, we’re going to commit for the long term.”

When the federal government was launching the Paycheck Protection Program to help small businesses survive the pandemic, the White House reached out to M&T’s SBA loan team for initial thoughts and perspective, Brozyna said.

“We are very strong in this space,” she said. “It is a pride point for us and also I would say a really big strength.”

Lester said the SBA’s local team helps build momentum for 7(a) loans. SBA officials create awareness at programs like Straight Talk, and then those small businesses come into branches like Key’s to follow up.

“We invest a lot of resources into being able to use this program in every way we can,” Lester said. “It allows business owners to do a lot, maybe in ways they wouldn’t be able to get financing otherwise.”

There’s been a leadership change at Courier Capital, an investment advisory firm owned by Financial Institutions.

James E. Iglewski was promoted to president. He joined Courier last year after working for two decades in private banking with several large banks.

Iglewski succeeded Thomas J. Hanlon, who shifted to the role of executive vice president of wealth management and co-chief investment officer. Hanlon had served as Courier’s president since 2016.

Courier has locations in Buffalo, Rochester, Jamestown and Pittsburgh. Financial Institutions is also the parent of Five Star Bank.

Want to know more? Three stories to catch you up:

The Buffalo Niagara unemployment rate remains near historic lows.

The long delayed Highland Park project is getting underway.

Tens of millions of dollars in federal funds are on the line for the region after it was named a “tech hub.”

Sodexo is cutting 80 jobs in Cheektowaga, putting tax breaks it’s received at risk.

Employees at Elmwood Tacos & Subs are the latest local workers launching a union campaign.

Kaleida Health is paying a big fine to the feds due to the overexpansion of an employee discount program.

The Lawley Group is expanding in its biggest deal yet.

Rob Savarino takes over for Savarino Companies at Buffalo Lakeside Commerce Park.

Why UB physicians in training are struggling to negotiate a union contract.

PUSH Buffalo is building a worker training center that focuses on green jobs.

M&T Bank’s earnings topped analyst forecasts.

Some Milk-Bone workers are on strike.

A troubled Buffalo nursing home is a candidate for a program targeting the nation’s poorest-performing facilities.

Affordable housing developers are collaborating on a $25 million revamp project of Playter Street.

Deadline to apply for pot licenses extended by two weeks, while enforcement of illegal sales expands.

The five 43North winners have high hopes for their time in Buffalo.

UB is getting a big donation to help build its new engineering building.

MacKenzie Scott is coming through for Neighborhood Health.

Five reads from Buffalo Next:

1. The long-abandoned Trico Products building in downtown Buffalo is slowly taking shape.

2. Why the Buffalo Niagara job market doesn’t look quite as vulnerable as it did a month earlier.

3. As the United Auto Workers’ strike against the Detroit Three automakers enters its second month, local autoworkers are waiting to see if they will be directed to walk out.

4. How Western New York colleges are adapting to a shrinking student population.

5. What it took for Mighty Taco to grow into a Buffalo food icon.

The Buffalo Next team gives you the big picture on the region’s economic revitalization. Email tips to buffalonext@buffnews.com or reach Buffalo Next Editor David Robinson at 716-849-4435.

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