Have the Big Banks Followed Through with Their Promises?
Many big banks claimed that they would increase credit to small businesses in 2010, but have they really done this so far? Are they really lending more money to small businesses or have they fallen through? Well, it’s a little difficult to tell due to the fact that “small business lending” for most banks usually covers a variety of different things ranging from real estate to credit cards, and there are very few lenders that separate their numbers for small businesses. Big banks were under pressure from the White House last year to increase credit. Some of the nation’s largest lenders, including Wells Fargo, Bank of America, and JPMorgan Chase, made some very big promises about increasing their lending to small business lenders in 2010. Four of the companies that set some concrete goals were asked how they were doing so far with their lending, and here is what they said.
Wells Fargo
According to Wells Fargo spokeswoman Sarah Toffoli, the company gave more than $2.9 billion in new loans to small business owners in the first quarter. The bank said that their goal for 2010 was to lend $16 billion, which is about $3 billion more than they lent in 2009, to companies with less than $20 million in revenue. “Based on the seasonality of business lending and the anticipation of an improved economy, we hope to meet our commitment by the end of 2010,” said Toffoli. John Stumpf, the chairman of Wells Fargo, says that the company plans to increase the new small business lending of $16 billion in the company’s annual report.
JPMorgan Chase
JPMorgan Chase reported in their first quarter earnings release that so far this year they have lent small businesses over $2.1 billion in new loans. They had said that their goal was to give out $10 billion in new credit to companies with revenues under $20 million. Their goal, which was announced November 9th, 2009, is an increase of $4 billion over last year. Spokesman Tom Kelly said that the bank’s first quarter lending to small businesses has increased 31% over the lending from the first quarter of the previous year.
Kelly also said that since November 9th, JPMorgan Chase has hired 235 new small business bankers, and they plan to hire 325 new employees by the end of 2010. Another interesting fact to note is that Chase has lent more than $110 million in “second-look loans” this quarter. Second-look loans are small business loans that are given to borrowers who were initially rejected but asked for Chase to review their loan application again.
Bank of America
In their first quarter Bank of America has loaned $19.4 billion to small and mid-size businesses, those who have less than $50 million in revenue. When taking out the loans to mid-size businesses, the bank has loaned $3.4 billion to small companies, those with less than $20 million in revenue, during their first quarter.
At a meeting with President Obama on December 14th, 2009, the then CEO of Bank of America Kenneth Lewis stated that the bank planned to increase their lending to small and mid-size businesses in 2010 by $5 billion. As of right now the bank has not released how much money they lent to small and mid-size businesses in 2009, so there is really no way to set a number on how much they will be lending in 2010 or on how much progress they have made this quarter towards meeting their goal for 2010. Spokesman Jefferson George said that the bank is currently running those numbers, and they hope that they will be able to make those numbers available soon.
Huntington National Bank
Huntington National Bank is a regional bank for the Midwest that is currently based out of Columbus, Ohio. In February they set a goal to increase their lending to small businesses, businesses with less than $15 million in revenue, by $400 million. Right now the bank says that numbers documenting progress towards their goal of lending $1.2 billion in 2010 are not available. Their spokeswoman LuJean Smith did say though that Huntington has currently hired more than fifty percent of the 150 new employees that they plan on hiring.