Best banks for small business

Posted on by biJay345

What the Best banks for small businesses are depends on many factors.  One of the main factors you might look into is whether the bank that you are considering received any funding from the Government as part of the Small Business Lending Fund.  The Small business lending fund (SBLF) was created as part of the Small Business Jobs Act.  This act was signed by President Barak Obama in 2010 to help local banks provide loans to local small businesses.  Total of over 900 banks in the US applied and only about 300 of them received the award.

Here is a complete listing of the Banks that received the fund.

The reason these banks could be the best banks for small business is because when the Treasury department approved this fund, they were very careful about it.  The process was  very stringent and the Treasury department was extremely careful to make sure that the banks receiving the funds were in good standing and they had a healthy track record of helping local small businesses.   It took nine months for the first application to be approved.

If a bank can go through such rigorous scrutiny from the Treasury department and still get the funds, that means they are worth a look.  The total amount allocated for the SBLF was $30 billion.  Of this only $4 billion was provided to the banks.

One of the criteria as a small business is the loan amount should be less that $10 million and they should have a revenue of $50 million or less.  Normally the Banks and Community Development Loan Funds that received this award should have assets of less than $10 billion.

One of the incentives of this fund to small banks was that if they could increase lending to small businesses by more than 10 percent, the interest rate on the loan to the bank would be 1 percent.  Many of the banks have met this criteria so far.  If the bank’s  lending doesn’t increase with in the first 2 years, their interest rate increases to 7%.  So these banks have a huge incentive and pressure to provide loans to their local small businesses.  If the lending doesn’t increase by 4.5 years, the rate goes up to as high as 9%>

For  Community Development Loan Funds (CDLFs), the funding is again structured to encourage small business lending  by enabling  access to low-cost capital.  CDLFs are non-profit loan funds.  They  play a critical role in distressed communities through-out the United States.  CDLFs provide  microloans to entrepreneurs. They also provide financing community facilities such as  charter schools and local health clinics.

So it might be wise to search for the best banks for small business in your community by looking at the list provided in this web site for each of the states.  The list also provides a listing of the branches in each of the cities where the funds are available.

 

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