Slideshow Hard Data on SBA's 7(a) Program

Published
  • October 13 2016, 12:11pm EDT
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Remember how last year's shutdown of the Small Business Administration's flagship loan-guarantee program prompted Congress to provide more funding? SBA made every penny count in the fiscal year ended Sept. 30, backing 64,073 loans for a record $24.1 billion — a 2% increase.

Banks Still Dominate

SBA is one area where banks' competitive position is showing little sign of slippage. Among the top 100 7(a) lenders, there were no credit unions and just four nonbanks. However, the largest nonbank, Newtek Small Business Finance in Lake Success, N.Y., is no slouch. It closed 517 loans for $395.6 million in FY 2016.

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Wells Keeps Top-Dog Status

It's been a tough couple of months for Wells Fargo amid its fake-account scandal. The San Francisco lender can take some solace in its continued dominance of the 7(a) marketplace. It closed 8,737 loans for just under $2 billion. The company made 7,254 loans for $1.9 billion during fiscal 2015.

The Wells stagecoach appeared to have rolled especially hard in August and September. Wells closed 1,509 7(a) loans for a whopping $457 million.


Up-and-Coming

Stability was the byword among the top five 7(a) lenders, though two newcomers managed to crack the top 10. BBVA Compass ranked as the No. 10 lender with 1,801 loans for $299.8 million to its credit. The Bank of Hope (the new name for BBCN Bancorp after it bought Wilshire Bancorp in July) edged into the No. 9 slot with 472 loans for $321.2 million.

Important Niche

Loans to Asian-American and Pacific Islander borrowers totaled $5.3 billion — or 22% of overall 7(a) production. Asian-American lenders make up 11 of the top 50.

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Massachusetts Momentum

Radius Bank in Boston closed 58 7(a) loans totaling $58.1 million this year, but look out in fiscal 2017. In May the $790 million-asset bank made headlines when it announced its intent to hire 35 new lenders as part of a plan to massively expand government guaranteed lending.

Expect the $8 billion-asset Berkshire Hills Bancorp in Pittsfield to move several rungs up the ladder, as well. Berkshire completed its acquisition of SBA lender 44 Business Capital of Blue Bell, Pa., a leading mid-Atlantic SBA lender, in May. Even without the new subsidiary, Berkshire Hills was already a fairly large SBA lender. It finished FY 2016 with 697 7(a) loans for $108.9 million.


Punching Above Their Weight

The SBA's top 100 includes most of the big banks. Along with Wells Fargo, JPMorgan Chase, U.S. Bancorp, PNC Financial Service Group, BB&T, Bank of America and TD Bank are all represented. But the list includes some small banks, too. Las Vegas-based Bank of George, for instance, which made 33 7(a) loans for $60 million in fiscal 2016, has just $145 million of assets. The $153.1 US Metro Bank in Garden Grove, Calif., recorded 54 loans for $52.6 million. The $192 million-asset United Midwest Savings Bank in De Graff, Ohio made 67 loans for $58.1 million.

Good Things Come in …

The average 7(a) loan totaled $360,000 in FY 2016, compared with $368,000 in FY 2015. A few banks were notable for playing in the shallow end of the 7(a) pool. Boston-based Eastern Bank recorded the smallest average loan size at $62,951 (855 loans totaling $53.8 million). M&T Bank in Buffalo had the next smallest average, $115,245 (1,739 loans for $200.4 million).