Look to Community Banks for Small Business Lending
Ami Kassar’s recent commentary “The State of Small Business Lending” in the New York Times gives short shrift to the role community banks are playing in making loans to small businesses. Nearly 60% of all loans under $1 million to small businesses are made by community banks, according to the Independent Community Bankers of America, even though community banks comprise only 20% of bank assets nationally. While national banks are saying “No,” community banks are saying not just “Yes,” but “How else can we help?”
There are 275 community banks across the country that participate in the Federal Government’s Small Business Lending Fund. Of those, nearly 90% have increased their small business lending in the past year. In fact, nearly 80% of those banks have increased lending to small businesses by 10% or more.
At EagleBank, we significantly increased our small business lending in 2012. During the year, EagleBank made over $185 million in new loans to area small businesses. Retailers, restaurants, contractors, consultants and professionals all benefitted from having a community bank that is willing to make loans to small businesses, understands the business model and knows how to underwrite it.
Banks, like any corporation, hold a duty to its shareholders to make prudent decisions. As a regulated industry, banks must be even more prudent in underwriting and making new loans.
No, not every start-up is going to be financeable by a bank, but give credit where credit is due. It is small businesses that will be the engine that propels the economic recovery. And it is community banks that provide much of the fuel.