Bank of America Study Optimistic About Small Business Lending

May 31, 2012 at 2:26 pm

Bank of America executive Robb Hilson says that it’s actually not that hard to get a small business loan from a big bank. In its semi-annual report on small businesses (surveying 1,000 businesses with revenue of $100,000 to $5 million and less than 100 employees), Bank of America found that 78 percent of business owners who applied for loans were approved in the last two years. But, he says, many business owners are not taking advantage of their lines of credit, with a majority saving it for use only in emergencies.

This is interesting, given that other surveys have found that getting a loan now is much harder than it used to be. A poll by the American Sustainable Business Council found that 61 percent of business owners say that getting a loan is more difficult now than it was four years ago. Ninety percent think that the availability of small business loans is a primary concern.

The Bank of America study does show that business owners think that lending requirements should be more lenient.

As the larger banks merged and consolidated, their ability to evaluate a business on an individual level eroded. BofA seems to be trying to reverse this by hiring 1,000 small business bankers across the nation, which might help bring back some of the more personalized approach to lending. As Hilson says, “These small business bankers are charged with spending time, getting to know small businesses — what their plans are, challenges are, what their opportunities are — to better understand what they’re doing and how we can help them.”

The question is, as always, who are the people not served by these efforts? Despite the optimistic report from BofA, there are still many entrepreneurs who will not be able to access capital from the larger banks, even with new small business bankers. To really expand access to capital, the financial sector needs banks and robust alternative, community-based lenders who can reach borrowers that would otherwise be denied, discouraged, and left out.

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Entry filed under: Banking, Banks, CDFI, Credit Unions, Small Business. Tags: , , , .

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