Published in News & Trends Small Business;
Politicians and banking executives are quick to hail small businesses as key to economic expansion and job creation. That message was front and center recently when New York Mayor Michael Bloomberg and American Express CEO Kenneth Chenault came to Rothman’s, the Manhattan-based, family-owned men’s clothier, and praised the store’s success as a shining example of the power small businesses have to revitalize local neighborhoods.
There’s just one problem: Rothman’s can’t get a bank loan. Much to his surprise, owner and president Kenneth Giddon was recently turned down when he sought financing for his small business.
Like Giddon, many small-business owners are exasperated by the disconnect between big banks’ promises to lend to small businesses and their real-life experiences.
“I fully understand the frustration,” says Nancy Bush, bank analyst and contributing editor to SNL Financial. “The rules changed — the whole game has changed. And no one told small businesses about it.”
TOO BIG TO LEND?
If the conditions for small-business lending in 2012 are convoluted, the solution, according to these experts, is clear: Small businesses should go to small banks to get their lending needs met. For one thing, smaller, regional and community banks “aren’t as exposed to the European debt crisis as the large banks are.
“We could retool the bigger banks to deal with small business, or concede that large banks just don’t do a good job with small business and automatically go to a smaller bank,” Bush says. “There’s a natural affinity between Main Street banks and Main Street businesses.”
Small banks already play an outsized role in lending to small businesses: according to Kassar, small banks, defined as having $500 million or less in domestic deposits, account for 31.5 percent of all small-business loans, even though they account for only 11 percent of deposits.
This is a guidance message from Merchant Advisors for those who plan to seek loans Please do contact us before you go else where for a loan for your Small Business Enterprise.