June 15, 2012

Introducing the 2012 Small Business Bank Award

 

In today’s world, banks and private lenders love to talk about their commitment to small business. They produce catchy and expensive ad campaigns as proof . . . and we tend to believe them. Why?  Because other than anecdotal evidence and numbers of SBA loans, there has not been an objective way to evaluate their commitment, or better yet, their performance - until now.  

Banking Grades (www.bankinggrades.com) gives every bank in America (that files an FDIC call report) a grade for its small business lending activity.  Now, small business owners can quickly identify banks in their neighborhood that are focused on, and committed to, lending to small businesses at reasonable rates. Banking Grades has already gained wide recognition in the small business community as a valuable small business tool and bank metric - Fox Business News, Huffington Post, Philadelphia Business Journal, The Street, NPR, Entrepreneur, and the Wall Street Journal.

The banking grades are derived from data that banks provide in their quarterly FDIC call reports. We divide the small business loan balances (loans with a balance of $1 million or less) by the domestic deposits to come up with the grade. Any bank that uses 25% or more of their domestic deposits to make small business loans gets an A.

We believe that not all banks are equal. They offer different products and serve different markets (even if their marketing campaigns suggest otherwise).  We know that if entrepreneurs start at the right bank, they will be less aggravated and more productive.  They will improve cash flow faster, hire more employees faster, and expand faster.    

That’s why we are also bestowing the 2012 Small Business Bank Award on every bank that gets an A. We hope that this award becomes a trusted symbol to small business owners, and that banks will prominently display it in their branches and on their websites.  In so doing, small business owners will know that they are walking into a bank that has a proven record of making loans to small businesses.  

If you are a small business owner or a bank official,  see how your bank grades.  If you are interested in promoting your award, we would love to hear from you.  Promoting the award will be good for your bank, and good for small businesses.

One Response to “Introducing the 2012 Small Business Bank Award”

    Dan Yates said...

    In the NPR article referenced above the small business owner talks about their frustration in trying to get a real estate loan for the operating facility that they operate the business out of. They argue that even though the loan payment on the building loan was about the same as the rent they had been paying for years, they could not get a loan from the big bank they had been dealing with for years. Considering that a real estate loan used for this purpose is one of the greatest investments and most important financing needs that a business owner has or will ever need, it is a shame that the methodology used by this rating tool makes no effort to capture owner user commercial real estate loans. These are basically business loans to small businesses that are secured by real estate and thus not counted in the rankings. Also, if a bank makes a small business loan and takes real estate as collateral, often times those loans are not classifed on the call report as a C & I loan. So, nice effort but the ratings miss the mark to some degree.

    July 13, 2012

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