A New York company that finances taxicab licenses has a deal to buy one of the largest nonbank Small Business Administration lenders in the Northeast.

Medallion Financial Corp. said it expects to complete its acquisition of Hartford, Conn.-based Business Lenders Inc. and begin making SBA loans by the end of the year.

Terms of the deal were not disclosed.

Andrew Murstein, Medallion's president and chief executive officer, said New York banks don't focus on SBA loans and the larger nonbank lenders neglect the urban market.

"The SBA market is there for the taking and the New York market is there for the taking," Mr. Murstein said. "It's a niche that is overlooked by the banking community."

Mr. Murstein said he wants to buy Business Lenders to expand outside New York and diversify away from the taxicab industry.

More than 90% of Medallion's loan portfolio is in New York, and three- quarters of the company's outstanding loans are to taxicab operators.

Business Lenders has 30 employees in five Northeast states and received SBA permission to lend in 10 additional states. The company originated $30 million in SBA loans last year, Mr. Murstein said.

The SBA loan market is fairly competitive in Connecticut, said William Attridge, president and chief executive officer of the $56 million-asset Maritime Bank and Trust Co. in Essex, Conn.

"Business Lenders had a presence in the marketplace," Mr. Attridge said. "There are a number of institutions that have personnel dedicated to making SBA loans statewide."

Medallion lends to taxi operators in New York, Boston, and Chicago and finances dry cleaners and coin laundries. Medallion also has one of the largest taxicab rooftop advertising businesses in the county.

"Banks think we are making riskier loans because they are smaller and made to minorities, but we have lower loan losses than almost every bank," Mr. Murstein said.

Mr. Murstein said the company has no losses on its taxicab loans, which require personal guarantees and have low loan-to-value ratios. He said the company has a 0.3% loss rate on other loans.

Publicly traded Medallion was founded as a specialized small business investment company, a firm licensed and regulated by the SBA that can lend only to women and minority-owned businesses.

In the past year, Medallion acquired three finance companies that lend to taxicab operators and are not restricted to lending to minorities. Mr. Murstein said he wants to buy other finance companies.

Despite Medallion's expansion into SBA lending, Mr. Murstein said few banks view the company as a competitor. Several banks invest in Medallion to gain Community Reinvestment Act credit.

"Bankers don't look at us as a competitor, because they are not as hungry as we are to go out and make as many deals as we do," Mr. Murstein said.

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