(Corrects Huntington National Bank's goal to increase small business lending to $1.2 billion, not by $1.2 billion.)
Are banks lending more to small businesses? It's hard to say. What's called "small business lending" cuts across several business lines at most banks, from real estate to credit cards, and few lenders report separate figures for small businesses. Still, late last year, under pressure from the White House to increase credit to Main Street, several of the nation's largest lenders—including Wells Fargo (WFC), Bank of America (BAC), and JPMorgan Chase (JPM)—made big promises to expand small business lending in 2010. We asked four that set concrete targets to boost small business lending in 2010 how well they met those goals in the first quarter—two appear to be making progress; figures aren't available yet on the others.
Wells Fargo extended $2.9 billion in new loans to small businesses in the first quarter, according to spokeswoman Sarah Toffoli. That's 18% of the bank's goal to lend $16 billion in 2010 to companies with less than $20 million in revenue—an increase from $13 billion in 2009. (Both figures include lending by Wachovia, which Wells Fargo acquired at the end of 2008.) "Based on the seasonality of business lending and the anticipation of an improved economy, we hope to meet our commitment by the end of 2010," Toffoli says in an e-mail. Chairman John Stumpf announced plans to increase new small business lending to $16 billion in the company's annual report. Small-business lending figures for the first quarter of 2009 and previous years are not available, Toffoli says.
JPMorgan Chase made $2.1 billion in new loans to small businesses in the first quarter, the company reported in its first-quarter earnings release, or 21% of its goal to extend $10 billion in new credit to companies with under $20 million in revenue. That goal, announced Nov.9, 2009, is an increase from $6 billion last year. Chase's first-quarter lending to small businesses is a 31% increase over the first quarter of 2009, according to spokesman Tom Kelly. He says the bank doesn't have comparable numbers from previous years.
Chase has also hired 235 new small business bankers since Nov. 9, Kelly says. The bank's goal is to hire 325 by the end of 2010. In addition, Chase made $110 million in "second-look loans," which are small business loans approved after borrowers who were initially turned down asked for further review of their applications.
Bank of America loaned $19.4 billion to small and midsize businesses (those with less than $50 million in revenue) in the first quarter, the bank said in an Apr. 27 report. Excluding midsize businesses, the bank loaned $3.4 billion during the first quarter to small companies with less than $20 million in revenue.
At a Dec. 14 meeting with President Obama, then-CEO Kenneth Lewis announced plans to increase lending to small and midsize companies by $5 billion in 2010. The bank hasn't released the total amount of lending in this category in 2009, however, so there's no way to tell what percentage increase it is or how much progress BofA has made toward the goal. Spokesman Jefferson George says the bank is still running those numbers and hopes to make them available soon.
Huntington National Bank, a regional bank based in Columbus, Ohio, and serving the Midwest, set a goal in February to increase small business lending by $400 million to $1.2 billion in 2010. The bank, which defines small businesses as companies with under $15 million in revenue, said specific figures for progress toward that goal were not available yet. Huntington spokeswoman LuJean Smith said the bank has hired more than half of the 150 new bankers it plans on adding.