Hartford Business Journal

10 HARTFORDBUSINESS.COM | NOVEMBER 11, 2024 (From left) Former CT Banking Commissioner Howard Pitkin; Bernard Sweeney, retired CT SBA director; Julio Casiano, retired CT deputy SBA director; and retired banker Peter Melly have launched Capital Business Lenders, a new small business lender in Hartford. HBJ PHOTO | MICHAEL PUFFER Big Names, Small Lender Retired CT banking commissioner, former SBA chief and his deputy launch small business lender and help a company that's struggling," Casiano said. "So, part of our goal is that we will be providing to any applicant or any client that comes in through the door, free service from cradle to grave." Heavy hitters Capital Business Lenders, which operates out of a leased 1,300-square- foot office in a New Park Avenue building, has assembled a small but seasoned team of banking experts. Senior Lending Officer Peter J. Melly, 77, has about five decades of commercial lending experience. At Bank of Boston, Melly led a team that included Casiano and focused on connecting with underserved commu- nities. That group stayed together through Fleet Bank's purchase of Bank of Boston, then was dismantled more than a year after Fleet was purchased by Bank of America, Melly said. After leaving Bank of America, Melly went to work for American Eagle Finan- cial Credit Union, where he launched its commercial lending division and was promoted to vice president. He retired a decade ago, but still helps the credit union with special projects. Former state Banking Commissioner Howard Pitkin chairs Capital Business Lenders' Board of Directors. Pitkin, also 77, worked in the state's banking department for nearly 40 years, and led it for 11 before retiring in 2015. Any loan Capital Business Lenders makes above $200,000 will require board approval. "I think if you look at the four of us, I don't think you're going to find anybody that's got better experience," said Sweeney, who is 74. "I mean, I headed SBA. Julio was a deputy, with 25 years in banking. Pete was a chief credit officer." Complementary service Casiano said Capital Business aims to work in concert with Connecticut's credit unions, banks and other small business lenders. He anticipates the state's $5 million will be entirely committed in three or four years, but the company plans to tap other federal funding sources to increase its lending capacity. Capital Business hopes to eventually become certified to participate in the SBA's 7(a) loan program, which guar- antees 75% to 90% of a loan, up to $5 million, for qualifying small businesses unable to gain funds through non-gov- ernment sources. These loans can be used for working capital, to refinance debt, acquire real estate or purchase machinery, among other purposes. Casiano said these guaranteed loans could then be sold off to recapi- talize Capital Business Lenders. Catherine Marx, SBA's current Connecticut director, said any BIDCO will have to build at least a year-long track record for review before qualifying for Small Business Administration programs. "The state of Connecticut approved two BIDCOs to enter the lending arena for our underserved communi- ties," Marx said. "These entities will work alongside SBA's nonprofit lenders, By Michael Puffer mpuffer@hartfordbusiness.com B oosting small business lending to Connecticut's Hispanic community was a top goal for Bernard Sweeney during his decade-long run leading the U.S. Small Business Administration's Connecticut office. It's why Sweeney hired Julio Casiano — a bank executive with a track record of outreach to minority and underserved populations — into the agency in 2009, and eventually promoted him to be his top deputy. Sweeney retired from the federal agency in early 2015. Casiano retired in October 2022, and almost imme- diately reunited with Sweeney to help launch Hartford-based Capital Business Lenders Inc., which aims to provide loans to underserved business owners in Connecticut's urban centers. Incorporated in late 2022, the startup received a lending license in June and got a critical boost last month when the state Bond Commis- sion approved a $5 million grant to capitalize the institution. Sweeney and Casiano, the two shareholders in the for-profit venture, hope to begin making loans — gener- ally ranging from $5,000 to $200,000 — by early 2025. Capital Business Lenders, Sweeney said, will accept loan applications from anyone, but focus its marketing on small enterprises owned by women, minorities, veterans and the disabled in Hartford, Bridgeport, Waterbury and other urban centers. "It's always been something that I've worked on in everything that I've ever done," said Sweeney, Capital Business' chief operating officer. "And this is just a continuation of what we did when we worked together at SBA. It's a part of us trying to give back a little bit." Capital and counseling Capital Business is what's known as a business and industrial development corporation, or BIDCO, a type of lender that is not authorized to take deposits and can only make business loans. The business model got a boost in Connecticut last year when state lawmakers passed legislation that allocated $15 million to BIDCOs in an effort to boost small business lending to underserved communities. The law allows for grants of up to $5 million per institution. Capital Business Lenders was the first to get funding approval. It's one of only two BIDCOs in Connecticut. The other one — New Haven-based Better Local Capital — launched last December and got its lending license in September. Better Local Capital is also looking to tap into the state grant funding, its CEO said. Under 1993 state legislation governing BIDCOs, an institution must have a net worth of at least $2.5 million to be licensed. Capital Business Lenders got its start with a $2.5 million loan from Middle- town-based Liberty Bank. That capital was used to buy U.S. Treasury bonds. Interest from those bonds is being used to pay back Liberty over 10 years. Casiano, who is president and CEO, said several banks were interested in investing in Capital Business Lenders. Doing so allows banks to meet their obligations under the federal Commu- nity Reinvestment Act. Loans will provide working capital to small businesses. Casiano, 70, and his colleagues will also educate borrowers and provide business counseling, even after loans are repaid, he said. "We have the knowledge to go in LARGEST SBA 7(A) LENDERS IN CT (FY 2024) LENDER TOTAL LOANS TOTAL LOAN AMOUNTS M&T Bank (NY) 168 $18,970,700 TD Bank (DE) 98 $9,200,100 Webster Bank (RI) 95 $31,411,500 Newtek Bank (FL) 64 $35,410,000 Liberty Bank (CT) 40 $10,710,000 Northeast Bank (ME) 38 $5,096,300 BayFirst National Bank (FL) 38 $5,046,300 KeyBank (OH) 36 $6,749,400 Readycap Lending, LLC (NJ) 32 $9,766,000 Live Oak Banking Company (NC) 24 $35,576,500 "Note: SBA's 7(a) program assists lenders to make small business loans, in which the SBA guarantees 75% to 90% of a loan, up to $5 million. Loans can be used for working capital, to refi- nance debt, acquire real estate or purchase machinery, among other purposes." | Source: SBA

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