This afternoon The Huffington Post covered the release of www.bankinggrades.com, a site that grades every FDIC insured bank in America on their small business lending. Elise Brooks, Director of Communications for The Financial Services Roundtable, an association that represents some of the largest banks in America, referred to our site as myopic. We respectfully disagree.
Ms. Brooks, you defend your clients’ records by citing a recent commitment by 13 of the largest banks in America to increase their lending to small businesses by $20 billion dollars. There are two problems with this claim. First, BankingGrades is based on self-reported data in 2011. You failed to comment on your clients’ loan records for 2011. Secondly, you failed to mention that this $20 billion is being allocated to small businesses that have revenues of $20 million or less. This includes companies with hundreds of employees. These aren’t Main Street businesses. The data used on www.bankinggrades.com is for loans to small businesses with a balance of $1 million or less, a category that is actually defined by the FDIC (Schedule RC-C Part II – Loans to Small Businesses and Farms).
Ms. Brooks, it seems that your clients have chosen an arbitrary cutoff of $20 million of revenue to report on small business lending. It would be just as easy for you to provide data on loans to companies with revenues of $1 million or less – which represent the vast majority of small businesses in America. All the data is available, and yet your members choose not to publish it. That’s kind of a myopic view of small business, is it not?
Bankinggrades.com is a one dimensional formula, as you suggest, but at least it accurately reflects how each bank in America is allocating their resources to small businesses.
You also defend your clients by suggesting that they help small businesses in non-lending ways, too. They offer financial education, assistance in putting together an attractive loan application, providing online resources, networking opportunities, and rebates for small-business owners. We have yet to meet a small business owner that has taken advantage of these benefits. This is not what small business owners want from the largest banks in this country. They want access to capital, particularly when most of these small business owners were there to help out your clients with their tax dollars for the TARP program.
Ms. Brooks, it is o.k. for the biggest banks in the country to not lend to small businesses. The biggest banks serve a different purpose. We just want them to stop confusing small business owners with elaborate PR campaigns when their own self-published data tell a very different story.
We challenge your clients to come up with a more accurate manner of measuring commitment to small business lending. Until then, Banking Grades will continue to use your clients’ self-reported data to help small businesses understand and navigate the lending environment.