by Rohit AroraJanuary 24, 2012
Study of 1,000 Small Business Loan Rejections in 2010-2011 Finds Bank of America, Chase Wells Fargo, and Sun Trust Most Often Denied Funding to Their Own Customers
NEW YORK, NY -- Biz2Credit, the leading online credit marketplace, today released the results of a study of 1,000 small companies denied loans from their existing banks since 2010. The analysis found that Bank of America, Chase Wells Fargo, and Sun Trust customers were among the most frequently rejected applicants for funding in Florida.
"Biz2Credit's analysis of primary data quantifies what many small business owners have been saying: big banks have been unwilling to lend -- even to their own customers," said Rohit Arora, CEO of Biz2Credit, who oversaw the research based on applications made on the online platform over the past two years.
These results follow a Los Angeles Times report that Bank of America has cut small business credit lines as part of a corporate overhaul by Brian Moynihan that started in 2010. While a spokesperson said that only a "very small percentage" of small-business customers have been affected by the changes, the number was in the hundreds of thousands. Bank of America said that companies were notified a year in advance, although numerous small business owners said they had not received the warnings.
"It's ironic that Bank of America has advertised that they are friendly to small business lending, but the opposite is the case. They have been the most rigid in their loan criteria and now are cutting credit lines," added Arora, one of the country's leading experts on small business finance.
Percentages of Florida Small Business Loan Rejections by Bank
Bank of America 25.00%
Chase Bank 17.86%
Wells Fargo 14.29%
Sun Trust 12.50%
"We are finding that the same banks that were lending to small business owners before the credit crunch essentially closed the spigots on entrepreneurs. Why did they stop lending, and when will they get back into the game? The economy was better in 2010-11 than it was in 2008-09," Rohit Arora added. "The businesses we looked at are survivors that made it through the recession. When they approach to smaller banks, credit unions and alternative lenders, they are getting money. The big banks are sitting on their assets!"
The small businesses examined in this analysis included only businesses in operation for more than two years, had credit scores of 650 or higher, and had an existing banking relationship. The information is based on actual loan applications made during 2010-11.
Founded in 2007, Biz2Credit is a leading credit marketplace connecting small and medium-sized businesses with lenders. The company matches borrowers to financial institutions based on business’ unique profile -- completed in less than four minutes -- in a safe, efficient, price-transparent environment. Biz2Credit’s network consists of 1.6 million users, 450+ lenders, credit rating agencies such as D&B and Equifax, and small business service providers including CPAs and lawyers. Having secured more than $500 million in funding throughout the U.S., Biz2Credit is widely recognized as the #1 online credit resource for small businesses.
News Source: http://www.free-press-release.com/news-biz2credit-identifies-big-banks-that-most-frequently-reject-small-business-funding-requests-in-florida-1327399001.html
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