The Small Business Administration's flagship 7(a) program is on its way to another record year, and it's not just big banks driving its growth.

Through June 10, 7(a) has guaranteed loans totaling $15.75 billion — a 9% increase over the record-setting fiscal 2015 pace. Though large banks remain the biggest users of the program, much of its success of late can be traced to increased participation from small banks.

"It's a self-sustaining, high-impact program," Curtis J. Myers, senior executive vice president at the $18.1 billion-asset Fulton Financial Corp. in Lancaster, Pa., said of smaller banks' growing interest in 7(a) lending. "We think the program runs very effectively. … When we see that we like to participate."

Last month, Fulton named Lynn Ozer to run its SBA lending operation. Ozer had led small-business lending at Susquehanna Bancshares prior to its sale to BB&T. She also served as president of the National Association of Government Guaranteed Lenders.

Other small banks, too, are making moves aimed at grabbing an even bigger slice of the pie.

Some, like Centric Bank in Harrisburg, Pa., have rapidly ramped up SBA lending by hiring more lenders. Some are expanding by adding new lines of business. A few have gone as far as acquiring SBA lenders.

It's a bit of a shift for small banks, many of which had limited their 7(a) lending in past years because they viewed the approval process cumbersome and bureaucratic.

While no one is mistaking the SBA for an online lender, the agency has worked hard in recent years to use technology to overcome the "burdensome" rap. In March 2015, it rolled out SBA One, an automated lending platform, to streamline its lending process. In April the SBA announced it had accepted its 1,000th application via the new platform. The SBA has also unveiled an app, SBA LINC, that connects prospective borrowers with lenders in their areas. The improvements appear to be paying off; the SBA says it has processed 43,415 7(a) loans in fiscal 2016, up 7% from the same period last year and 45% from fiscal 2012.

The $390 million-asset Centric did little SBA lending until it hired a five-person team of SBA lenders away from a small bank in Bucks County, Pa., in April 2015. It 2015 it made roughly $26 million of SBA loans "and I expect we will surpass that this year," said CEO Patricia Husic.

In suburban Washington, D.C., Access National Bank in Reston, Va., is looking to boost its SBA prospects by opening a branch in nearby Alexandria. President and Chief Executive Michael W. Clarke said the move is being driven by the success of SBA efforts there to date, as well as opportunities for new business. Access' planned branch would be a few blocks from the U.S. Patent and Trademark Office, which Clarke hopes will act as a magnet for the government contractors and high-tech firms Access targets.

"We see a tremendous opportunity in Alexandria related to SBA," Clarke said.

The $1.3 billion-asset commercial bank has been a 7(a) lender since opening its doors in December 1999. Access, however, has charted course different from many other bank SBA lenders. Instead of focusing on restaurants, franchise businesses and professional firms such as dentists, veterinarians and accountants, Access targets middle-market companies — especially government contractors and emerging technology companies.

Catherine Mealor, an analyst who follows Access for Keefe, Bruyette & Woods, said Clarke's muted SBA strategy makes sense for bank operating in the shadow of the nation's capital.

Access "is not likely to bring SBA lending on a national platform," Mealor said. "SBA fits into their strategy, but as a complement. They stick to their knitting and know the government contracting business very, very well."

Bob Coleman, publisher of the Coleman Report and a recognized authority on small-business lending, characterized Access' SBA business as "completely different" from that of other lenders.

A recently closed deal serves as a good example of the bank's tactics. Access lent $10 million to a Maryland information technology firm. Of that total, $5 million came in the form of an SBA loan used to retire mezzanine debt, with the remaining $5 million provided by a conventional line of credit. Multitiered financing packages are common in Access' portfolio, Clarke said.

"It's more labor intensive than high-volume, more quality over quantity," Clarke said. "If you own a franchise business, a lot of times all you need is that SBA loan. But a defense contractor might need a commercial real estate loan and then use SBA for working capital. Our people are very good at undoing snags."

Access earned $15.4 million in 2015, an 11% increase over 2014. For the quarter that ended March 31, Access reported a profit of $4.1 million, good for a 1.35% return on average assets. Asset quality has been strong, with nonperformers amounting to just $7.3 million.

A big reason for its success is that Access retains its SBA loans. "We prefer to hold on to our loans to take advantage of earnings and to protect the relationship," Clarke explained.

By contrast, loan sales, which generate noninterest income, play a central role in the business plans of many SBA lenders. In fiscal 2015 (which ran from Oct. 1 2014, through Sept. 30) 12,354 SBA loans were sold for $7.86 billion, according to the SBA. Those numbers were up significantly from fiscal 2014, when 10,174 loans were sold for $6.8 billion.

The increased demand from investor helps explain banks' growing interest in SBA lending. Over the past few months, for instance, the $777 million-asset Radius Bank in Boston has recruited 25 veteran lenders as part of its push to create a nationwide SBA platform.

Atlanta-based State Bank Financial Corp. embarked on a similar strategy in April, hiring a nine-person SBA lending team based in Durham, N.C.

Chicago's Byline Bancorp was so determined to raise its SBA profile it agreed earlier this month to pay out $105 million in cash and stock to acquire the $433 million-asset Ridgestone Financial Services in Brookfield, Wis. Along with branch offices in Brookfield and Schaumburg, Ill., Ridgestone operates a national lending platform that originated $165 million of 7(a) loans in the SBA's 2015 fiscal year.

On Thursday, United Community Banks in Blairsville, Ga., which has invested significant resources in SBA lending over the past two years, announced it had hired veteran banker Shannon Hay to lead a team that will focus on lending to certified public accountant practices around the country.

Access expects to open its Alexandria branch — its sixth — in the third quarter. Clarke said he made the decision to expand there after reviewing the portfolio and realizing Access had booked a substantial number of loans there.

In all, the company has closed $77.2 million of loans in Alexandria, prompting Clarke, who refers to himself as "an anti-branch guy," to conclude it might do even better "if we hung a little bit of a shingle out there."

Alan Kline contributed to this story.

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