Two lenders accounted for more than half of all U.S. Small Business Administration loans in Western New York, leaving competitors in the dust but also demonstrating the limited options for small-business borrowers.
In the combined Buffalo and Rochester markets, M&T Bank Corp. and Financial Institutions' Five Star Bank generated 343 loans for $32.9 million through the end of August, under the SBA's flagship 7(a) loan program.
That's 51 percent of the total dollar volume of all SBA lending in the two markets, or $64.09 million, and 56 percent of the total number of loans, at 609.
That's a strong contribution by the two banks, but it also reflects the challenge facing many small commercial borrowers of not having many alternatives. Twenty-three other lenders also participated in SBA lending, but only two of them exceeded 20 loans over the first 11 months of the government agency's fiscal year.
Victoria L. Reynolds, deputy director of the SBA's Buffalo district, which includes Rochester, acknowledged the increasing concentration of lending in the top two lenders, who normally produce just one-third of the total volume. But she said the top 5 continue to represent 70 percent of all volume.
"In general, there are the same number of banks serving our market," Reynolds said. "Small businesses continue to have choices for lenders."
Total lending activity is still down sharply because of the recession, but officials are encouraged by a more recent uptick in lending because of the federal stimulus legislation, she said.
M&T has long been a market leader in small-business lending, both on its own and with the SBA's guarantees. The Buffalo-based bank alone originated 190 loans for $23.6 million, followed by Warsaw-based Five Star with 153 loans for $9.29 million.
After that, lending dropped off sharply, with No. 3 First Niagara Financial Group producing 86 loans for $6.7 million, and No. 4 HSBC Bank USA making 49 loans for $3.9 million.
Rhode Island-based RBS Citizens is No. 5, with 20 loans for $964,900.
In the agency's separate 504 program, for certified development loans, 12 banks made 42 loans for $23.6 million. They were led by M&T, with nine loans for $6 million, and Canandaigua National Bank and Trust Co., with eight loans for $6.57 million.
Fourteen lenders made 57 loans to veteran-owned businesses, valued at $5.77 million. Five Star was No. 1 in loans, with 17 for $1.5 million, while M&T was tops in dollars, with $1.46 million in nine loans. First Niagara had 10 loans, for $503,000.