June 13, 2013
President's Message - Small Business Loans
Having worked for National, Regional and Community banks during my career, I have seen the impact each type of bank has on the variety of communities they serve. I have to say, my passion is with Community banks, as the impact they have in the community is the most direct. We understand the economic issues that impact local businesses because we live and work in the very same communities, experiencing the very same issues. This gives us a unique perspective to understand and more fully support our local businesses. It came as no surprise to me when I read an article in American Banker that addressed the important role that community banks have in the community.
Big banks make big pledges to small business. Headlines buzz with news of their commitments to these small business communities, yet these hefty commitments are minimal when small-business loans to assets are measured. At most of the large and regional banks, these small business loans make up a very small percentage of their total assets.
For example, at Bank of America and Citigroup, 7(a) SBA loans represented less than 0.01% of total assets. At $50 billion-asset Navy Federal Credit Union, the small business loan portfolio makes up less than 0.5% of the total loan portfolio. In all fairness, the big banks do lend billions of dollars to small business each year.
How does this compare to community banks? Community banks hold 10% of the banking industry's assets, but are responsible for more than a third of all small-business loans according to Independent Community Bankers of America. At many community banks, small business loans can equal up to 50% or more of their assets.
It is not uncommon for a borrower to be turned down two or three times by a big bank, before getting approved at a community bank. One of the reasons why is that it is easier for a community bank to understand the small business owner's concerns because we review each loan request individually and take time to understand the business of our borrowers. Community banks are also more likely to provide borrowers with alternatives instead of a "no".
Bank of Southern California's investment in its community is reflected in its ranking as a top SBA Lender in San Diego for the past several years. As of June 30, 2013 our business loan portfolio represented approximately 70% of our total loan portfolio, which evidences our committment to serving the business community.
Bank of Southern California is committed to serving small business in the Southern California market. We are available to assist you or someone you know with their small business lending needs. Contact us today for a free needs analysis and consultation.