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Healthy Economy, Reduced Demand Push SBA Loan Volume Down in FY 2019

District Works with Banks To Jumpstart Small Business Lending
Release Date: 
Monday, October 7, 2019
Release Number: 
20-01
Contact: 
Kelly.lotempio@sba.gov

BUFFALO, NY – A “perfect storm” of a healthy economy in Western New York, and reduced demand for loans from small business borrowers has led to a substantial decline in the number of small business loans guaranteed by the U.S. Small Business Administration during FY 2019, SBA Buffalo District Director Franklin J. Sciortino said today.

Although the Buffalo District posted a strong hold year in 2018 with 845 loans approved, that number dropped by nearly 32 percent in 2019.  The dollar value of those loans declined by 6 percent, from a combined $156 million in 2018, to $147 million in 2019.  Average loan size increased from $173,000 in FY 2018 to $239,000 in FY 2019, suggesting a shift in capital needs of local small businesses to support their continue growth in our current economy. 

In FY 2019, the District also supported 25 loans that will provide small businesses with long-term, fixed-rate financing to acquire fixed assets for expansion or modernization, for a total of more than $16 million.  These 504 loans are made available through Certified Development Companies (CDCs), SBA's community based partners for providing 504 Loans.  This 11 percent increase compared with FY 2018 demonstrates the importance of SBA’s 504 Program, which remains a powerful economic development loan program that offers small businesses another avenue for business financing.

In April 2018, the U.S. Small Business Administration began offering its 504 loan and the debenture that funds it with a 25-year maturity.  This new 504 loan term complements the 10 and 20 year that have been made available since 1986.

Sciortino said local CDCs have emphasized the need for an affordable, fixed-rate instrument with a term-to-maturity more closely resembling other longer term mortgages and now we are able to offer that.

 “This increased flexibility in their loan terms has allowed small business to be in a better position to manage their capital and face challenges like rising operating expenses.” Sciortino said.

For the twenty-sixth consecutive year, M&T Bank was the leading SBA 7(a) lender in both the number of loans and dollar volume.  M&T bank approved a total of 186 loans with an aggregate value of over $19 million. 

Competitively, Key Bank saw an increase in their dollar volume by 24 percent with $13 million in SBA lending and Evans Bank had a dollar volume increase of 66 percent for over $10 million.

“Our banking industry is evolving,” said Buffalo District Director Franklin J. Sciortino.  “Banking relationships between small businesses and lenders are no longer dependent on a bank’s physical presence.”

The Buffalo District Office had 49 different lenders participate in SBA lending.   And in FY 2019 we welcomed HSBC Bank and Generations Bank as additional sources of capital. 

Sciortino added; “we will continue to support all lenders that commit to provide capital to our WNY small business!”

For more information on how to get an SBA loan, visit www.sba.gov

 


About the U.S. Small Business Administration

The U.S. Small Business Administration makes the American dream of business ownership a reality.  As the only go-to resource and voice for small businesses backed by the strength of the federal government, the SBA empowers entrepreneurs and small business owners with the resources and support they need to start, grow or expand their businesses, or recover from a declared disaster.

It delivers services through an extensive network of SBA field offices and partnerships with public and private organizations. To learn more, visit www.sba.gov.

 

*The Buffalo District Office of the Small Business Administration serves the fourteen (14) western most counties of New York State, which includes Erie, Niagara, Chautauqua, Cattaraugus, Wyoming, Orleans, Genesee, Alleghany, Monroe, Livingston, Wayne, Seneca, Yates and Ontario counties.