Financial services: Coming to the aid of small business

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Financial companies are extending hundreds of billions of dollars in loans to small businesses and promising to extend much more over the next several years. Commercial banks, responsible for half of U.S. small-business loans, have pledged, on aggregate, an additional $100 billion over the next two-to-three years.

Consider a few of these commitments: BMO Financial Corp. intends to increase its lending pool by $5 billion over the next two years to small- and medium-sized businesses; PNC originated or renewed $1 billion in small business loans just in the third quarter of 2011; JP Morgan Chase is boosting its lending by $2 billion, or 20 percent, in 2011; and Wells Fargo this year became the first financial institution to lend more than $1 billion in Small Business Administration loans in a single year.

On Sept. 20, a partnership of 13 major banks committed to boost lending to small businesses in underserved communities by $20 billion over the next three years.  Citigroup led the group, saying it intends to loan small businesses $8 billion in 2012, up from $6 billion in 2011 and $4.5 billion in 2009.

"These commitments by our lending partners leverage both commercial and government programs that work and will provide billions of capital to help small businesses all across the country grow and create jobs, and drive local economic growth," maintains U.S. Small Business Administrator Karen Mills.

The SBA and financial institutions, as partners, are extending a record amount of government-backed loans.  At the end of September, such loans reached $30 billion, the highest mark in the SBA's history.  Among major banks, U.S. Bank approved $630 million in loans during that period, up 24 percent from $504 million lent in 2008. Bank of the West's small-business loans surged 89 percent in the year ended August 2011, and during the quarter ended June 30, CIT Group closed $1 billion in new loan commitments.

The financial services industry's assistance isn't simply in loans.  More than 30 financial institutions have extended non-lending support to small businesses in 2011.  Among these services: providing insurance, retirement planning and financial planning; education support; networking; online portals; and rebates to small-business owners.  Many help small businesses manage disasters by relaxing collection efforts, reducing pricing and offering disaster bridge loans.

Support of small businesses extends beyond banks. Insurance companies and other financial companies also are lending a hand. The Allstate Protection segment has a separate organization called Emerging Businesses that includes business insurance for small business owners. 

One recent year, Allstate invested $165.8 million with 1,978 women- and minority-owned businesses. The Hartford created The Business Owner's Playbook®, which helps identify and address important issues facing small business owners. The insurer provides protection for more than a million small business owners. And Raymond James, which was involved in more than 128 public financings in 2011, judges Ernst & Young's Entrepreneurship Awards Program.

The financial services industry is committed to helping small businesses grow and remain strong.  When they come to us, we serve as partners to these companies on street corners across America.   How are we doing? Ninety-three percent of small business respondents for a National Federation of Independent Business (NFIB) Survey (September 2011) reported that their finance needs are met or they're not interested right now in borrowing.

Steve Bartlett is president and CEO of the Financial Services Roundtable and Richard Hunt serves as president of the Consumer Bankers Association.

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