KeyBank says it intends to step up its local lending through a Small Business Administration program that supports businesses which might otherwise have trouble obtaining financing.
During the past federal fiscal year, which ended Sept. 30, Key was No. 9 in dollar volume in the nation for SBA 7(a) loans, and No. 12 in the number of loans approved. The SBA can guarantee as much as 85 percent of the amount of a loan in the program, limiting the lenders’ risk.
In the Buffalo-Rochester region in the past fiscal year, Key was No. 6 in loans approved, at 43, and No. 3 in dollar volume, at $10.9 million. Both totals were solid increases from a year earlier. But expectations for Key's participation have risen, since Key acquired First Niagara Bank, which was an active lender in the SBA program. The number of loans made by Key under the program for the past fiscal year was less than half the combined Key and First Niagara total of 93 from the year before.
John Wright, Key's business banking sales leader for Western New York, said the bank in late 2016 was focused on ensuring the integration with First Niagara went smoothly. "Since then, we have been business as usual and have been focusing on our core products, and SBA, in the business banking group, is definitely a core product," he said.
Tara Lester, an SBA relationship manager with Key, said the SBA loans tend to be a good fit for businesses that are expanding, making acquisitions and buying real estate.
The SBA loans are useful for completing the sale of a business whose owner has reached retirement age but doesn't have a successor lined up, Wright said. "There are other people who are interested in buying that company, and SBA is the perfect product to help finance that acquisition."
As Key tries to bolster its totals, it has ample competition in the Buffalo-Rochester territory. M&T Bank for years has dominated the list of lenders. Both Rochester-based ESL Financial Credit Union and Warsaw-based Five Star Bank have ramped up their numbers. Lenders without any branch presence in the region have jumped in, too, often for a few big-dollar loans.
Key has some catching up to do: It didn't record any 7(a) loans in October, the first month of the new federal fiscal year, in the Buffalo-Rochester region. Wright said that essentially a "timing issue," noting that Key didn't record any of the SBA loans in October 2016, either. But he said Key has a good number of loans in its pipeline and expects to see strong results for November and December.
M&T Bank led both in the number of loans, with 19, and total dollars, at $4.95 million. Across the region, lenders recorded a total of 64 of the loans, up from 61 a year ago, with a combined dollar volume of $15.6 million, up from $7.7 million a year ago.