A credit crunch that felled several of the nation's largest banks has been a boon for one type of loan.

When business owners want to expand, they turn to banks for loans to fund the bigger office or new equipment. In years past, they would turn to commercial paper, short-term loans issued and wholly backed by private lenders.

The credit crisis has practically wiped those products out.

During the last month, the financial crisis brought about a "flight to safety," meaning that lenders and investors have put more money into low-risk investments.

Therefore, owners such as Michael McBride, a San Marcos dentist, have turned to small, local banks that avoided the riskier, high-return products and specialized in small-business loans backed by the government. "I would have preferred conventional financing," McBride said. "That was time-consuming and difficult with a flurry of paperwork, all to no avail."

Instead, McBride acquired a Small Business Administration loan, which is partially backed by the government. The terms were not as favorable as a traditional loan, but it was available.

One of the largest such lenders is Temecula Valley Bank, which ranked as the eighth-largest in the country for one type of the loan, said Stephen Wacknitz, president of the bank.

And though the credit crisis has created an uptick in its government-backed loans, the slowdown in construction loans and leap in cost of interbank borrowing has offset those gains, Wacknitz said.

"It's a tough time for every bank," he said. "You have a deflationary real estate market … and the cost of money has not come down commensurate with the prime rate."

Another local business owner, Page Nicol, is leaning on the government-back loans to expand. Nicol runs Max Muscle franchises for the San Diego area, including three in North County. Max Muscle stores sell nutritional products.

Nicol said he hopes to open the eighth San Diego County location during the first quarter next year and plans to have 25 stores within five years.

None of his plans has been offset by a looming recession, Nicol said.

"People are saying 'I'm going to cut back on certain things, but when it comes to my personal health and personal fitness, that's where I draw the line,'" he said.

Even among the recent credit turmoil, Nicol said he is unconcerned about financing because of the availability of Small Business Administration loans.

The bank that issued the loan to McBride, the San Marcos dentist, is Excel National Bank. It has benefitted from the credit crisis, said Tom Shepherd, Excel's chief credit officer.

Shepherd works out of the bank's Temecula office. The Beverly Hills-based lender has doubled its staff to handle the influx in Small Business Administration loans that it is able to finance because the lender avoided issuing mortgages during the housing run-up through 2005, Shepherd said.

Excel has always focused on the government-backed loans, which are primarily issued for the purchase of commercial real estate.

"It really does feel very good," Shepherd said. "The bank is in its fourth year, and we're not saddled with the credit issues that older banks are."

McBride said the loan would be used to purchase a larger office space that will enable his business to offer oral implants that typically require visits to several dentists. The move is expected to increase his gross revenue by 30 percent, he said.

The loan program means more revenue for the city of San Marcos, as the purchase of a new, vacant office will provide additional property taxes. But it might not mean additional jobs.

McBride said he might hire an additional staff member, but the extra office space would mainly help increase efficiency at his business, he said.

Contact staff writer Zach Fox at (760) 740-5412 or zfox@nctimes.com. Read his blog, "On the Realside," at nctimes.com/blogs/minding_your_business