NORTH BAY -- Santa Rosa-based First Community Bank loaned the greatest amount of dollars to small businesses in the North Bay through the U.S. Small Business Administration's 7(a) program in the 2011 fiscal year, jumping 10 places ahead to No. 1 and joining a wave of lending both locally and across the country.

The bank loaned $10.76 million through nine of the government-guaranteed loans, versus two loans and less than $1 million lent in fiscal year 2010. Bank President and CEO Kathy Pinkard attributed the jump to a renewed focus on small business lending, the addition of a new department manager and several new positions.

“The bank has always strived to maintain a diverse small business portfolio, which includes conventional and to a smaller extent SBA loans,” said Ms. Pinkard.

The total value of loans nationally rose to their highest levels the agency’s history, driven largely by provisions that included a 90 percent guarantee to banks administering the popular 7(a) loans to businesses that was renewed for the first quarter of the year.

For the SBA fiscal year, Oct. 1 through Sept. 30, $79.25 million in government-guaranteed loans went to small businesses in Marin, Sonoma and Napa Counties. The amount came close to doubling the value of loans made in fiscal year 2010, when institutions in the region loaned approximately $43 million.

The number of loans in the North Bay also increased, though to a lesser degree. Institutions approved 171 of the loans for the 2011 fiscal year, compared to approximately 130 in the prior year.

As was the case on the national level, lenders in the North Bay said that much of the increased activity was concentrated in the first quarter of the year, before the expiration of the Small Business Jobs Act funding that allowed the agency to cover 90 percent of a 7(a) loan’s value if in the event of a default. The provision increased the palatable risk for institutions lending to small businesses, reverting to the previous 75 percent backing for loans above $150,000 for the latter three quarters of the year.

Despite the expiration of the provision, the overall value of loans in the North Bay remained high, a trend that lenders credited to a gradual increase in business activity across industries and a permanent increase in the size limit of SBA 7(a) and 504 loans — from two to $5 million, and $5.5 million for manufacturers obtaining financing in the 504 program.

Next in total lending value behind First Community Bank was Sonoma Bank, at $10.24 million over seven loans. Wells Fargo Bank National Association loaned $8.98 million spread over the highest number of loans – 24. Exchange Bank loaned the fourth highest, $8.56 million, and Redwood Credit Union, which loaned the greatest amount in the region in the 2010 fiscal year, approved $6.7 in the three counties while approving more loans elsewhere.

"The 7(a) program to us is sort of the 'tip of the the sword' for our small business lending program," said Joe Smith, SBA manager and senior vice president for Sonoma Bank and its owner, Sterling Savings Bank.

Following Wells Fargo in the total number of loans was San Francisco-based U.S. Bank National Association, at 18. Several institutions approved 15 loans: JPMorgan Chase & Co., Circle Bank and Redwood Credit Union. Exchange bank approved 13 of the 7(a) loans.

While larger loan limits helped to elevate the overall value of lending in fiscal year 2011, Exchange Bank Senior Vice President and SBA Manager Sherrill Stockton was among a number of lenders who said many of the loans completed were smaller. Despite the handful of larger loans completed after the increased limits, smaller loans would be likely to remain the mainstay in the coming year as economic uncertainty depresses business owners' plans for greater expansion and investment.

However, the new fiscal year and beyond might present some opportunities for well-poised businesses to take advantage of currently low rates through the 7(a) program, helped by the Federal Reserve’s commitment to help keep interest rates low into 2013. Some are using the program to finance the purchase of property at a time when prices are low, or to buy businesses that are increasingly offered for sale by retiring baby boomers.

“I think that more businesses that have survived are going to see that there are opportunities,” she said, though the overall amount of 7(a) lending in the region could be less in the current fiscal year than in 2011.

Redwood Credit Union Senior Vice President of Business Services Michael Downey said that the institution has already seen strong 7(a) activity since the new fiscal year began in October, driven robustly by smaller businesses seeking a “restructuring of their balance sheet.”

“We’re off to a good start this year,” he said, projecting the 2012 fiscal year to end with slightly higher numbers for the credit union than in 2011. “It’s encouraging for what’s happening out there in the business world.”

“Historically, the SBA programs have been a critically important lending vehicle after economic downturns in order to add stability and support for small business owners,” said Bryan Borders, senior vice president and small business lending manager at First Community Bank. “We would expect that the SBA programs would continue to gain momentum until we see sustainable growth, at which point conventional loans and leases become more attractive to our borrowers.”