While many businesses found it tougher to access capital to expand during the Great Recession, Dennis S. Norkiewicz's growing dental practice didn't.
Since forming Rockville Dental Arts in 2002, Norkiewicz has obtained four loans from M&T Bank to make major equipment purchases, refinance a practice, support an acquisition and fund other expenses. Two of those loans have come in the past year: some $450,000 to refinance another practice in Germantown and $150,000 for a merger.
"Our business has stayed strong," Norkiewicz said. "We have been able to obtain loans even during the downturn."
After some lean years, business lending has picked up at banks such as M&T. Between September 2011 and August, M&T's small-business loan originations increased by $35.5 million from the previous 12-month period in the Greater Washington region, which includes Montgomery and Prince George's counties, said Philip Hosmer, a spokesman for the Buffalo, N.Y., bank. In the rest of Maryland, M&T's small-business lending during the same period rose by $12 million.
Other banks have seen similar lending jumps. The value of loans backed by the U.S. Small Business Administration from Sandy Spring Bank of Olney, the largest bank based in Maryland with assets of $3.9 billion, to businesses throughout most of the state rose by about $12 million in an 11-month period ending Aug. 31 from the same period the previous year.
The value of all loans held by Maryland banks rose by 2 percent in the past year to $22.6 billion as of June, the first such increase in five years, according to the Federal Deposit Insurance Corp. Besides tighter credit standards and a struggling economy, a key factor for the loan decline in previous years was that the number of Maryland institutions dwindled by 24 since 2007.
The SBA has streamlined and simplified many of its loan programs, and the business and lending communities are regaining confidence in the economic climate, SBA Administrator Karen Mills said in a statement.
"The credit markets are increasingly willing to help small businesses establish themselves, grow and create new jobs," Mills said.
More optimistic
Factors behind the lending increase at M&T include businesses feeling more optimistic about their near-term future and M&T's community-minded approach that is committed to small-business growth, said Eric Feldstein, group vice president and business banking market manager for Greater Washington, Virginia and Central Maryland.
"Part of M&T's core philosophy is to be active in the community," Feldstein said. "That's not forgotten among the business community. In our lending approach, we have skilled bankers who are committed to the community."
Sandy Spring's year-over-year organic loan growth in the second quarter was its fourth consecutive quarter of such an increase, Daniel J. Schrider, president and CEO, said in a statement. While total loans, which include all categories such as home and commercial real estate, increased 16 percent, business loans rose by 63 percent. About half of the total loan increase was due to the acquisition of CommerceFirst Bank of Annapolis.
"We have maintained our momentum despite a struggling economy and intense competition in the markets we serve, due in large part to our improving credit metrics and deposit mix," Schrider said.
Other area banks that have seen substantial business loan growth include Bethesda institutions Monument Bank and EagleBank, which were both up 16 percent in the second quarter from a year earlier, according to the FDIC.
EagleBank has continued to see low levels of problem assets and credit losses, said Ronald D. Paul, chairman and CEO of parent Eagle Bancorp. Bad loans were cited by economists as a key factor for the Great Recession.
"More and more businesses view EagleBank's capabilities and services as highly attractive," Paul said.
Some small companies still avoiding loans
Rockville engineering firm Sheladia Associates has avoided obtaining conventional loans from banks and other institutions, fearing taking on too much debt in uncertain economic times, said President Manish Kothari.
The business has lines of credit from banks, which are similar to credit-card lines that can be used for smaller purchases. Kothari attended a state trade mission to India last year, which helped his company win a $3.7 million contract to work on India's National Highway 215, among other contracts. Sheladia Associates also received a state export grant that allows stipend funds for business expenses related to exporting activities of up to $10,000.
"I'm still a little bit worried about the market," Kothari said. "If you borrow a lot of money from a bank and can't pay it back, then you are really in trouble."
Getting a bank loan would put more financial pressure on a smaller business, said Ginny Williams, managing partner and founder of ArchScan. The Annapolis company provides research, inventory, document management and scanning services.
"You would have to be assured that the work is there to repay the loan," Williams said. ArchScan does have a line of credit for smaller purchases, she said.
But those who want to take their small business to its next level often need bank loans, especially in the medical field, which requires expensive equipment, Norkiewicz said. Interest rates have been low lately and fees reasonable, he said.
Norkiewicz's first loan with M&T Bank about eight years ago was to finance the purchase of some new dental equipment.
"That brought us a lot of new business, and we were able to hire more people," Norkiewicz said. His practice now has 12 employees.
Medical, professional services see boost
The lending rise has been seen across all industries, but those with the greatest increase include dental practices and other medical firms, as well as professional services such as accounting and architecture, Feldstein said. M&T Bank increased small-business lending in all of its markets last year by $196 million, almost quadrupling a pledge to boost such loans by $50 million.
Just as loans are increasing, Maryland banks are seeing more deposits, as well. The value of deposits rose 4.2 percent in the past year to $120.8 billion as of June, greater than the 2.8 percent rise the previous year, according to the FDIC.
Bank of America of Charlotte, N.C., continued to be the top depositor institution in the state with $24.0 billion in deposits. M&T was next with $18.0 billion, followed by PNC Bank of Pittsburgh, Capital One of McLean, Va., and Wells Fargo Bank of San Francisco.
Many Maryland business owners with whom Feldstein has consulted are "conservatively optimistic" about their own company's near-term future. Still, there are many who are relatively pessimistic about what the future holds, such as uncertainty over taxes and how federal health insurance reform will affect their companies, he said.
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SBA-backed loans on the rise
The five largest lenders of SBA-backed loans to small businesses in Maryland have increased their lending amounts in recent months. Dollar amounts are in millions.
October 2011 - August 31, 2012; October 2010 - August 31, 2011
Bank - No. of loans - Amount; No. of loans - Amount
* M&T Bank - August 2012: 191 - $22.7; August 2011: 215 - $19.6
Susquehanna Bank - August 2012: 9 - $14.7; August 2011: 14 - $10.4
* Sandy Spring Bank - August 2012: 36 - $12.8; August 2011: 4 - $1.0
Cecil Bank - August 2012: 3 - $7.4; August 2011: 1 - $0.4
* TD Bank - August 2012: 7 - $5.4; August 2011: 3 - $0.5
Source: U.S. Small Business Administration, Baltimore; includes every Maryland county except Montgomery and Prince George's
© 2012 Post-Newsweek Media, Inc./Gazette.Net
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