April 26, 2016
SBA Hot Topic Tuesday — Top Ten 7(a) Lender Criticizes SBA for $2 Million Plus Loans
By Bob Coleman
Editor, SBA Hot Topic Tuesday
In his annual letter to shareholders M&T Bank’s Chairman of the Board and CEO, Robert Wilmers says 33% of the SBA’s 7(a) budget authority supports large loans to the detriment of smaller dollar lending.
“The SBA, the government’s primary vehicle for promoting the growth of small business in America, appears to be deviating from its core mission.
“Today, the SBA supports half as many small businesses, a decline of over 40,000, and two-thirds as many jobs, as it did prior to the recession.
“Instead of making small loans to small businesses, the fastest growing SBA loan segment has been for loans over $2 million—growing 91% since 2012. Now, nearly a third of the SBA’s annual lending authority goes towards supporting these large loans, ostensibly at the expense of smaller dollar lending.”
Wilmers also criticized SBA for enacting regulations causing lenders to abandon the program.
“Banks participating in SBA loan programs are governed by 528 pages of requirements.
“In addition, the SBA regularly releases policy notices that modify the rules banks must adhere to. Just last year, there were 13 such notices.
“Given this administrative burden, it is not surprising that small, community banks appear to be opting out of the SBA program, potentially reducing access to capital for small businesses.
“Since 2012, the agency’s loan programs have seen a 13% reduction in bank participation—the equivalent of 324 such institutions.
“Much work needs to be done in order to remove the barriers that prevent banks from participating in the program if the SBA is to fully realize its stated mission of assisting small businesses and lifting the economy.”
M&T Bank ranks 7th nationally on the Coleman Report 500 by number of loans — 1,273 for $166 million for an average loan size of $197,000.