BofA's $5B Small Business Lending Goal Is 6% Boost

Posted by: John Tozzi on May 5, 2010

When Bank of America’s CEO announced last December that the bank planned to increase lending to small and medium-sized businesses by $5 billion in 2010, the bank didn’t say what the baseline for that increase was, so it was difficult to judge how significant that $5 billion headline number was.

Today we got some useful context from BofA. In 2009, the bank loaned $81.4 billion to small and mid-sized businesses, which it defines as companies with less than $50 million in revenue. (“Small” businesses have less than $20 million.) So the pledged $5 billion increase represents a 6% increase over the bank’s 2009 lending. We don’t have comparable numbers from before 2009.

As we reported yesterday, BofA made $19.4 billion in loans in this category in the first quarter, which we can now tell is 22.5% toward its goal.

As we and others have noted, banks’ claims about small business lending are exceedingly difficult to verify. It’s generally not reported on a separate line in financial statements, and it cuts across many different business lines, including commercial real estate, retail banking, credit cards, etc. We’re doing our best to track lenders’ statements on small business credit and watch how they follow through.

Reader Comments

Jim DeLapa

May 6, 2010 8:35 PM

Thanks for keeping tabs on what's really happening with SBA loans. As your article points out, there are varying definitions of 'small business.' Our site visitors at http://greatbusinessplans.com tell us that individuals thinking about starting a new business will find it exceedingly difficult to get an SBA loan. Often, for them, only the SBA "micro loans" are available. It would be interesting if you had any stats on growth in loans of that variety.

Sandra in Florida

May 7, 2010 10:05 PM

The CEO of BofA (Kenneth Lewis) needs a reality check. Businesses with annual sales of 20 Million a year are NOT SMALL BUSINESSES! Small businesses are the backbone of America and it is time the CEO's of these big banks we bailed out stat to help real small business owners out. They are not because they have no clue, 20 Million in annual sales he thinks is small business!

Jeff

May 11, 2010 9:28 AM

I've found that money is much easier to find in the private sector by providing complete transparency of financial detail and business strategy. These "investors", which are actually lenders by my personal GAAP principles, are much easier to work with and won't create restrictive covenants that limit a small business' utilization of free cash flow.

The smart guys understand that the stock market is not equity, but subordinated public debt with last place on the lien chain. Yet, someone long ago decided we should book it as equity, so an entire industry could be created off of transactional volume. Laughable at best.

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What's it like to run your own company today? Entrepreneurs face multiple hurdles new and old, from raising capital and managing employees to keeping up with technology and competing in a global marketplace. In this blog, the Small Business channel's John Tozzi and Nick Leiber discuss the news, trends, and ideas that matter to small business owners. Follow them on Twitter @newentrepreneur.

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