Simsbury Bank Receives $9 Million to Lend to Small Businesses

Need some money? If you are a small business, the may be just the place to help.

The U.S. Department of the Treasury announced that two Connecticut community banks received a total of $20 million through the Small Business Lending Fund (SBLF). The SBLF, which was established as part of the Small Business Jobs Act that President Obama signed into law, encourages community banks to increase their lending to small businesses, helping those companies expand their operations and create new jobs.          

The banks receiving funding included:

• SBT Bancorp Inc. (Simsbury Bank) — $9 million
• BNC Financial Group Inc. (New Canaan) — $11 million

“These funds will provide critical support to Main Street community banks so they can expand their lending to small businesses,” said Deputy Secretary of the Treasury Neal S. Wolin. “This program helps entrepreneurs in communities across the country access the capital they need to grow their operations, invest in new equipment, and hire additional workers.”  

Some 900 banks have applied to the program and so far 75 to 80 banks have been approved, said Chief Financial Officer and Executive Vice President at Simsbury Bank Tony Bisceglio.

“We were happy to be among that original group,” he said. “The terms are very good.”

The money is a loan of sorts to the bank and the idea is to turn around and lend it to small businesses. And there is a nice incentive to do just that.

“The more business loans that we make, the lower the interest rate that we have to pay,” said Bisceglio.

The interest rate changes every quarter and banks have to report to the U.S. Department of Treasury on the loans.

The loan starts off at 5 percent and the more loans the bank makes the lower it goes. The lowest rate is 1 percent. Simsbury’s initial rate is 3 percent as the bank has already been making loans, said Bisceglio. In four and a half years the interest rate can reach 9 percent, depending on how many loans have been made.

Simsbury Bank expects to have all the $9 million loaned out by next year, said Bisceglio.

Small business is defined as a businesses that has $50 million or less in revenues. Typically, said Bisceglio, the businesses the bank deals with have about $5 million in revenue and loans are generally $1 million and $2 million.

“It really is a great program,” said Bisceglio. “We’re very excited about it.

Bisceglio said he didn’t see a downside to the program and said he thinks the public will see it the same way. It is intended as a stimulus, and the bank is happy to play its part, he said.

SBT Bancorp Inc., Simsbury Bank’s holding company, received preliminary approval for the $9 million back in July. In addition, at that time, the company’s board approved a dividend reinvestment plan for its shareholders, which it expects to put into place in the near future. The two initiatives provide the company with capital to continue to expand its business lending activities and support the growth in related deposits and services.

“Since the onset of the financial market crisis in September 2008, Simsbury Bank has increased its small business loans by 33 percent and total loans by 17 percent,” said President and Chief Executive Officer Martin J. Geitz, in a press release at that time. 

Small businesses play a critical role in the U.S. economy and are central to growth and job creation, said the press release announcing the loans from the U.S. Department of Treasury. Small businesses employ roughly one-half of all Americans and account for about 60 percent of gross job creation. But small business owners faced disproportionate challenges in the aftermath of the recession and credit crisis, including difficulty accessing capital.

The SBLF helps small businesses meet this challenge by providing capital to community banks that hold under $10 billion in assets. For more details on the SBLF program, visit, link and link.

Simsbury Bank is an independent, local bank for consumers and businesses. The bank, with approximately $325 million in assets, has offices in Avon, Bloomfield, Granby and Simsbury. Simsbury Bank is wholly owned by publicly traded SBT Bancorp, Inc. For more information, visit www.simsburybank.com.