Banks are making efforts to loosen up lending to small businesses—but it seems it still isn’t enough. The Wall Street Journal recently
took a look at the state of small business lending and what banks are doing to improve it.
Some of the not-so-positive stats from the Journal:
Even if small businesses aren’t ready to borrow, banks are ready to lend. At Wells Fargo & Co., small business loan-approval rates were up 18 percent in the fourth quarter of 2010 compared to the same quarter of 2009.
So why aren’t small business owners biting? As an entrepreneur myself, the weak demand for loans doesn’t surprise me. Many small companies became gun-shy of loans during the depths of the recession when their loans were called in or lines of credit slashed for reasons they didn’t understand. If it didn’t happen to you, it might have happened to a colleague of yours. Without loans to rely on, we learned to rely on ourselves.
To drum up demand, banks are practically beating the bushes for small business customers. Examples the Journal cites include a regional bank that’s cold-calling small businesses; a new software program from Bank of America that makes it easier for bankers to offer credit cards and other financial products to small business owners in certain branches; and banks giving more weight to quarterly reports, booked orders and projected sales. Bank of America will add 1,000 small business bankers in the next 18 months, and U.S. Bancorp is training employees at most of its supermarket branches to make small business loans.
As banks seek to extend help to small businesses, it’s worth asking what your bank is offering. With so many banks going out of their way to woo you, if you’re not getting what you need at your business bank, start looking for greener pastures.
Even if you don’t need a business loan, now is a good time to examine your options. Some of the other products and services banks can offer include business checking, payroll services, business credit cards. Of course, a good banker can also be an advisor to your company, listening to your needs, suggesting the products and services that match your goals, and matching you with other professionals who can help you achieve your business dreams.
The mentors at SCORE can help you achieve your dreams, too. Find out how to get counseling 24/7 at the SCORE website.