What Are Big Banks Doing for Your Small Business?

Big Banks 2012

Last Year Vice President Joe Biden, along with the chief of the Small Business Administration, Karen Mills, announced a pledge on behalf of big banks. They pledged that big banks – 13 of them - would do more to increase small business lending by $20 billion over three years. To date the terms of the commitment have not been made clear.

Recently a reporter for the New York Times, Ami Kassar, further investigated the commitment that big banks made. Kassar found that the terms had not been agreed upon between the big banks and the government.

After speaking with the Financial Services Roundtable, a trade organization that represents the 13 member banks, Kassar found each of the big banks were given permission to set their own terms and that each could pledge to increase their lending as they saw fit. Therefore it was necessary to interview each of the individual major banks in order to determine the terms of their commitment to the small businesses of America.

Jim Seitz of the small business corporate communications team at Wells Fargo declined to talk specifics, but commented that “Since the S.B.A. is gathering data on an industrywide effort, we believe the focus should remain on our industry’s collective efforts, not on any individual institution.” He went on to say, “We can say that Wells Fargo is well ahead of its commitment under this initiative.”

A representative for Bank of America, Don Vecchiarello said “In 2011, the bank surpassed its pledge to increase new small-business lending by $1 billion over 2010 levels. Through the first half of 2012, the bank has continued this strong trend and is currently on pace to exceed its 2012 pledge by more than $1 billion.”

JPMorgan Chase claimed that it had “increased small-business lending by 35 percent in the first half of 2012.” JP Morgan Chase went on to explain their small business lending commitment by explaining that the new loans would specifically be given to businesses with annual revenue under $20 million. Furthermore, JP Morgan Chase said that “our total small-business lending figures — $10 billion for the first half of 2012 — include new originations and increases to existing lines of credit. For the lines of credit, they are a combination of draw downs and total commitments.”

After speaking with the banks Kassar was able to talk to Emily Cain, president of the Small Business Administration. Cain said that “each institution is tracking its progress against the collective commitment,” and that “Each institution uses its own definition of a small business for the purpose of this commitment.”

Cain also said that a report will soon be released tracking the progress of this commitment to small business owners around September 20^th, as that date marks the first anniversary of this pledge.

So will this pledge mean more lending will be available for your small business? The message is resoundingly unclear. Apparently the terms will stay as clear as mud. Until then banks are still going to be giving as much lending to small businesses as they choose….or don’t choose!

Need help with your small business? Or just some help understanding what options may be available? Call the experts at Horizon Business Solutions at 614-577-1700 or visit their website at www.horizonbiz.com.

Jessica Harmon | 09/14/2012

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What Are Big Banks Doing for Your Small Business?