Small Business Finance News
White House Meeting Results Could Help Small Banks Assist SMBs
Written by Jenna Weiner
Obama and community bank executives will discuss easier access to government capital toward SMB lending.
The recent meeting of President Obama and community bank chief executives could put an end to bank regulations that prevent lending boosts for small businesses. This could be good news for small business owners looking to expand their enterprises.
According to the Wall Street Journal, many community bank executives think the current credit crunch is a result of overzealous regulations. American Bankers Association chief operating officer Diane Casey-Landry told the source that regulators are forcing banks to reclassify loans and cut off credit to existing borrowers.
Obama has already proposed initiatives that would unlock credit to small businesses. Under the proposed legislation, banks that submit plans to increase SMB lending would get new government capital at a dividend rate of 3 percent instead of 5 percent.
Small banks are particularly eager to have these initiatives started. The Journal reports that banks with less than $1 billion in assets have more than half of their portfolios in small businesses, while bigger banks have just 21 percent in small business loans.
While increased lending from small banks could prove useful to SMB owners, corporate banks have already expanded SMB loans. Earlier this month, Bank of America, JPMorgan Chase, and CIT Group pledged to increase SMB lending at a bankers' meeting hosted by the White House.
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