leading Small Business Administration lender.

After 16 years in the top spot, the First Union Corp. subsidiary slipped to second place, behind Heller Financial Inc., in the fiscal year that ended Sept. 30.

Chicago-based Heller originated $536.5 million in 7(a) loans in fiscal year 1999, according to the SBA, 66% more than the previous year. Money Store, which was acquired by Charlotte, N.C.-based First Union last year, originated $414.1 million, down 4%.

Heller officials attributed the surge from No. 3 to reaching customers in new markets. They insisted that overtaking the Money Store was never a goal, and they that promised credit quality would not be sacrificed to hold on to the top ranking.

"We would like to hang on to it, but we know it's very competitive out there," said Debra Riley, national sales manager at Heller Small Business Lending. "We will continue to do prudent lending."

Fiscal 1999 was a banner year for SBA-guaranteed lending, according to data that the agency released Wednesday. Loan volume soared 12.5% to a record $10.15 billion, 7.3% more than the previous record, set in 1997. About 3,200 lenders made nearly 44,000 loans to small businesses.

The most active lender was Bank of America Corp. Though Heller, Money Store, and Newcourt Small Business Lending were the clear leaders in terms of dollar volume, Charlotte, N.C.-based Bank of America made the most loans by far. Bank of America and its subsidiaries made 2,159 loans, totaling just under $150 million. Money Store and First Union made a total of 1,044 loans.

Newcourt, a subsidiary of the Toronto-based equipment leasing firm Newcourt Credit Group Inc., had set a goal this year of becoming the nation's top SBA lender, and even held the No. 1 spot through the first three quarters. It finished third, however, originating 954 loans, worth $407.6 million.

Minneapolis-based U.S. Bancorp and its subsidiaries made 733 loans, for a total of $326 million, and GE Capital Corp. originated 372, worth $231 million.

Though Heller originated only 754 loans, their average size was $725,970, roughly twice Money Store's average.

A leading SBA lender in the Midwest and the West for many years, Heller was able to boost volume by targeting customers in the East and Southeast.

Ms. Riley added that the Money Store's merger with First Union and Newcourt's pending sale to New York-based CIT Group Inc. "created a lack of focus with some of our competitors that we were able to capitalize on."

First Union officials downplayed the significance of the merger and Money Store's place in the rankings. Spokeswoman Sarah Holden said First Union and Money Store have made a commitment in the last two years to increase all small-business lending, not just SBA lending.

"Our goal is to cover all types of small-business borrowers," said Ms. Holden. "We're really not setting our sights on any rankings."

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