Bank of America (NYSE: BAC) Growing Small Business Banking
Bank of America (NYSE: BAC), the North Carolina based banking behemoth has it’s sights set on small business banking. Earlier this year the firm announced plans to appoint more than 1,000 small business bankers, and now, 30 such bankers have been added with 20 in the Washington area and 10 in the Seattle metro. The firm is actively recruiting across the country, and is well on it’s way to accomplishing it’s goal.
The old adage goes that small business is the engine that drives the economy – but due to difficult credit markets, these small business entrepreneurs have faced difficult obstacles obtaining the necessary funding for their pursuits. According to the U.S. Small Business Administration, in Washington there are approximately 532,160 small businesses. These businesses account for more than 97% of all employers and employ over 50% of the private-sector workforce.
Through BofA’s small business bankers, small business owners will be able to access local expertise and a dedicated resource that properly understands its exclusive needs. Small business bankers will be able to evaluate the business owners’ credit, deposits, payroll and cash management needs besides providing proper guidance. This, in turn, will enable these businesses to manage finances in a better way and work more efficiently.
BofA has been constantly pursuing active lending to small-scale firms. In the first quarter of 2012, the company extended approximately $106 million in credit to small businesses across Washington. BofA has also been actively contributing to the Community Development Financial Institutions program by providing $200 million worth of finance to small businesses, which do not qualify for conventional loans. The CDFI program was initiated in 2010 to help some 9000 odd small businesses and maintain around 14,000 jobs.
These actions are a small step in the right direction, buy may be indicative of a larger growing trend.
Similar to the actions of BofA, JPMorgan Chase (NYSE: JPM) is seeking to expand their lending to small businesses. In the first quarter, it provided credit of more than $4 billion to small businesses and offered loan and raised capital of more than $445 billion for its commercial and consumer clients.
The demand for loans in the small business arena is immense, and growth in this area may be an important predecessor to larger scale future national level growth. Credit is the backbone to these small businesses, and the absence of credit since the financial crisis has surely stunted growth and extended the period of slow growth we’ve witnessed these past four years.