Who's Your Daddy?
Just how friendly is your friendly neighborhood bank? The SBA can tell you. The SBA offers a number of reports that help identify the banks that are most active in making microloans in each state, among them Micro-Business-Friendly Banks in the United States.
The most recent version of this report shows a large jump in the number of microloans-up 19 percent from June 1997 to June 1998. As for actual cash, however, while the number of loans surged, the dollar amount inched upward only 3 percent. Smaller average-sized loans may reflect recent bank promotions of lines of credit and credit cards to small businesses.
Compare that with the whopping 13 percent increase in the number of big-business loans, and you have to ask whether there's an adequate supply of microloans available to small borrowers. There aren't any definitive answers-at least not yet. "In light of the continuing merger boom, we will be watching to see whether the microlending expansion keeps pace with the growth in lending to larger businesses, especially over the longer term," notes the SBA's chief counsel for advocacy, Jere W. Glover.
With a little homework, you can find out which banks are most active in making microloans in your state. If no local institution warms up to you, check the SBA publication for friendly out-of-state banks; many of the 567 banks that make business loans of less than $100,000 cross state lines to do so. In fact, in many states, the majority of microloans are issued by out-of-state banks. In Florida, there are 24 active lenders of microloans, only three of which are Florida-based; the top nine are out-of-state banks.
You might also want to check out the SBA's report Small Business Lending in the United States, which ranks about 9,000 individual reporting commercial banks (by state) based on their small-business-lending practices. This and other reports are available at http://www.sba.gov/ADVO/lendinginus2.html or by calling (800) 827-5722.
Also visit http://www.entrepreneur.com/bestbanks for a recent listing of the 187 "voted most friendly to small business" banks. And be sure to consider SBA-preferred and SBA-certified lenders-especially those that participate in the low-doc and pre-qualification programs. They may not be ranked in these studies, but they're nevertheless small-business-friendly.
Paul DeCeglie (MrWritePDC@aol.com) is a former staff reporter for Journal of Commerce and American Banker.