As banks and traditional financial institutions are cautious to provide small businesses with loans due to the recent credit crunch and recession, micro and small-sized enterprises in Western New York are seeking financing from the Small Business Administration (SBA), a federal agency that provides funding and other forms of assistance to this sector.
In the agency’s local office, 724 loans which totaled about $108 million were granted to small businesses during the fiscal year that ended Sept. 30, or a 7.1 percent increase in the number of loans and 51 percent rise in funds.
Under SBA’s flagship 7(a) program, which covers most of the loans provided by the agency, gives government-backed guarantees to private lenders that will cover the “unpaid” debts in case the borrowers default with their payment.
According to government records, 32 lenders, including credit unions, have participated in the 7(a) program compared to 26 during the previous year.
Meanwhile, SBA’s 504 program, which targets local entrepreneurs, is designed for purchases of equipment, real estate, and other fixed assets also grew 8 percent in number of loans and 4.1 percent in funding.
Overall, micro and small businesses in Buffalo and Rochester have obtained $130.2 million government-backed financing during the last fiscal year, helping about 609 small and startup companies that employ 8,449 workers which included 1,737 new hires.
In a statement, SBA district director in its Buffalo office Franklin Sciortino said he was “happy with what they are doing to help small business owners.”
Group manager for business banking in Western New York Alfred F. Luhr III also said that the “agency has always been consistent, despite economic crises, when it comes to assisting small business customers” by providing them with finances that will allow them to expand in the market.
When it comes to the number of approved loans, Buffalo-based M&T Bank posted the highest with its 237 loans which covered businesses in Buffalo and Rochester, covering about $32 million, or a 12.9 percent increase in number of loans.