“The building was falling apart,” he said. “To be an ophthalmology practice that people would feel comfortable recommending, we needed a space that was fresh and current.”
Hammer reached out to several banks, put in three loan applications and was won over by M&T Bank. “We had an established practice, but banks were scared to lend a lot of money because of what was happening in the economy,” he said.
The bank was able to structure a $2.1 million loan through the Small Business Administration’s 504 program, which funds fixed assets such as equipment and real estate. With financing in hand, Hammer purchased a 5,000-square-foot building on Georgia Avenue in Olney for $2.1 million.
“Our practice wouldn’t have been able to grow in the old location, but because we can reconfigure the space in the new building, there’s tremendous growth potential,” said the eye doctor.
Hammer is one of 231 local businesses to receive financing from M&T through the SBA 504 program in the past two years. During that time, the bank has ranked as the top SBA lender in the Washington area based on the number of loans originated.
M&T has held on to the top spot through the first half of fiscal 2012 — the six months ending March 31 — by providing 40 loans worth $5.1 million to area businesses. Those figures, however, compare with 48 loans valued at $5.6 million for same period a year ago.
Back to pre-boom levels
Overall, there were 99 SBA loans totaling $39.7 million made to local businesses in the past quarter, compared with 112 loans worth $55.1 million a year earlier. To be sure, the high loan volume between October 2010 and December 2010 was a bit skewed. Borrowers at that time were rushing to take advantage of waivers on fees before they expired under the terms of the Small Business Jobs Act of 2010.
SBA lending activity, though below the towering levels of 2006 and 2007, has returned to a pace that was common in the pre-boom years. The latest quarter of activity illustrates a continuation of that trend.
“There’s increased cautious optimism among small business owners,” said Eric Feldstein, business banking market manager for Greater Washington and Virginia at M&T. “The market is coming back, and they’re more confident about the long-term business environment.”
Feldstein estimates that 25 percent of M&T’s local portfolio is comprised of SBA-backed loans. Demand, he said, is especially pronounced among medical practitioners, such as Hammer, as well as professional and financial service providers.
“These service segments have really taken a very disciplined approach in making sure that they were able to handle the current economic down cycle,” Feldstein said. “They’ve been able to come out of the recession a little stronger than many of the other industries.”
Cardinal Bank chief executive Bernard Clineburg is noticing a similar trend in demand from medical practices and accounting firms. However, the McLean-based bank, named the top community bank SBA lender, is seeing the most demand from mid-size, rather than small, businesses.
Clineburg, nonetheless, stressed the importance of cultivating relationships with mom-and-pop operations. “If you give someone their first loan and you treat them right, they will never leave you,” he said.