When the Small Business Administration releases its latest fiscal year roundup this week, the usual suspects are expected in the lineup of banks that made the most SBA loans in Massachusetts - Fleet Bank and Citizens Bank.

But making government-guaranteed small business loans is an even bigger business for some lesser-known banks.

Danvers Savings Bank and Hartford, Conn.-based First International Bank have seven offices in the Bay State between them.

But they rank near the top in making SBA loans, successfully vying for business against much bigger banks that have hundreds of Bay State.

The top four banks in gross dollar amounts of SBA loans in Massachusetts through Aug. 31 - 11 months into the SBA's fiscal year - were First International, with $29.7 million; Fleet, $20.9 million; Danvers Savings, $13.1 million, and Citizens Bank, $6.6 million, the SBA has reported.

James Moynihan, analyst at Advest in Boston, says the big banks and little banks have different reasons for doing SBA loans.

"For big banks, the main benefit is the public relations value, showing that they care about small businesses in the region,'' he says. ``For some small banks, it's an important way to generate loans with limited exposure to possible losses.''

That's because the SBA repays lenders in its biggest program 75 percent of a loan's value, up to a maximum of $750,000, if the borrower can't pay it off.

Patrick McGowan, the SBA's New England regional administrator, credits Danvers Savings' and First International's success to their long-term emphasis on making guaranteed business loans.

"Both of them made a strong commitment to the SBA program many years ago," says McGowan. "In the good times and in the bad, they have been top participants.''

As a result of that commitment and a proven loan performance record, Danvers Savings and First International are preferred lenders for the SBA. That means the banks can handle most of the paperwork and approval themselves, cutting turnaround time considerably.

"They can process loans in a matter of days instead of weeks,'' McGowan says. "That's a significant advantage.''

While both banks have enjoyed the same success in garnering low-risk profits by making SBA loans to high-risk businesses, they get there using very different strategies.

Danvers Savings targets prime SBA borrowers - restaurants, copy shops, grocers, beauticians, service stations and day care centers that employ an average of 11 workers.

The North Shore bank makes more than twice as many Massachusetts loans in the SBA's biggest program, known as 7a, as First International. But its $184,000 average on deals done since 1990 is far shy of the program's $750,000 limit.

First International concentrates more on larger loans to manufacturing, wholesale and distribution companies that employ an average of 33 people.

The average SBA 7a loan size for the Connecticut bank since opening its first office in the state in 1994 is about $621,000, more than three times the size of the typical Danvers Savings deal.

A $75,000 loan that helped Mike Depaolis, 31, open Nico's Pasta and Panini in Saugus earlier this year is typical of Danvers Savings' SBA lending.

After working 10 years as a systems analyst at Fidelity Investments, Depaolis decided it was time to pursue his dream of owning a restaurant.

"I did some research at the SBA office in Boston, saw Danvers Savings on a list of preferred lenders and went to them. They gave me my loan on the first shot,'' Dipaolis says.

Serving informal panini sandwich lunches and more elegant Northern Italian dinners in the evening, Nico's has done so well that Dipaolis says he may be back for another loan soon.

"We're taking off now and I'm starting to think about opening a larger location in addition to this one. I'll definitely go back to Danvers Savings,'' he says.

"We may not do as many total loans or total dollars as the giant banks do, but we're right up there with them,'' says Daniel Rich, head of Danvers Savings' small business unit.

Rich built the bank into an SBA-lending powerhouse in 1985, after leaving behind a 10-year career at the agency, where he was acting chief of the SBA's regional office's finance division.

While Rich concedes that Danvers Savings relies heavily on guaranteed loan programs for its business lending, he says it also does traditional loans.

"It used to be that a majority of our business loans were in guaranteed programs,'' he says. ``Now it's 50-50 at best.''

"Banks are not allowed to do guaranteed loans exclusively,'' he says. "If you can lend without an SBA guarantee, you are required to go that route.''

Unlike Danvers Savings, First International concentrates solely on financing small and mid-sized businesses.

Originally a small, family-owned bank, it has transformed itself in the past 12 years into an international business lender specializing in government-guaranteed lending.

"We closed our last retail banking branch a couple of years ago, and we are now totally focused on business lending,'' says Jack Mello, in charge of First International's Boston office. "Besides being a top SBA lender, we were named `Small Business Bank of the Year' by the U.S. Export-Import Bank and do a lot with the Department of Agriculture.''

Dan Hernandez of ODF Construction in Roxbury says he had gone to all of the big banks last year looking for a working capital loan because his business had more than tripled and he had just won a $3 million contract from the city of Boston.

Credit history problems left over from another business in the 1980s, however, made him unbankable in their eyes, he says.

"Then I found First International and within three weeks I had my loan,'' Hernandez says of the $1.2 million in working capital he got with his SBA loan. ``As a result, we have been able to triple the number of people we employed during our busiest time this year. That's about 90 jobs.''

Whether it's a big bank burnishing its image or smaller banks seeking to build a relatively low-risk loan portfolio, regional SBA chief McGowan says his main concern is getting money to small businesses.

"They employ more than half of the people in this country,'' he says. "Despite the boom times, it can still be very hard to start a small enterprise in a high-risk business. That's what we're here for." n