Caribbean bank takes on local SBA lenders
Banco Popular incorporates territory in Massachusetts
Before 2006, Puerto Rico's Banco Popular was not one of the top U.S. Small Business Administration lenders in Massachusetts.
In fact, the bank and its Popular Small Business Capital division had yet to issue an SBA loan in Massachusetts.
Now it has, and the $14,368,600 in SBA loans it issued in Massachusetts in 2006 has suddenly put Banco Popular in the company of Bank of America, TD Banknorth, CIT Small Business Lending Corp. and Sovereign Bank as one of the commonwealth's biggest SBA lenders.
Branch-less
And it's done it without establishing a branch office in the state.
James Garvey, president of Flagship Bank in Worcester, said, "I don't think their strategy is branching."
He said new SBA lenders in Massachusetts represent nothing more than "an additional source of capital," and Popular, like others, has grown its SBA lending practice by a series of agreements with franchise companies.
When someone signs up to open a franchise that has an agreement with Popular, the financing is already in place.
According to Edward Burke, a Banco Popular SBA business development officer based in Avon, Conn., the bank "decided they wanted to expand their SBA division and become a national player."
Burke said Popular is rolling out aggressive marketing campaigns, and is run by management "that would like to be number one in the country in the next few years."
"They hired SBA business development officers and higher-up managers from some of their competitors, and they jumped from down on the list to 11 in '05, to eight in '06 to three in '07 nationally with the SBA."
A new attitude
In order to grow, the bank had to shed its image as a bank for Hispanics. Banco Popular began in the 19th Century in Puerto Rico, and until it decided to go national with its SBA programs, it concentrated on areas with large Hispanic populations like New York City, Florida, Texas and California.
New England's Hispanic population is growing, but Banco has its sights set on a broader target.
"We've been developing the New England market for just over two years," Burke said. "We made the move and the name change (to Popular Small Business Capital) to appeal not only to Hispanics, but to national customers."
Offering $2 million, small business loans without collateral has a certain appeal, but Popular has a way to go to be number one.
In Massachusetts, all other SBA lenders are dwarfed by Citizens Bank, which issued $43,007,000 in SBA loans in 2006.
Citizens' nearest competitor was Sovereign Bank, which in 2006 issued $17,094,000.
Understandably, Warwick, R.I.-based Citizens is a bit nonchalant about Popular's growth in Massachusetts.
"Competition is good for customers," said Michael Jones, a Citizens spokesman. "Competition is also good for the community, considering the importance of small business to the economy."
Jones said, "our strategy has not changed. We're focused on meeting the unique needs of our customers."
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