New York, NY (PressExposure) January 17, 2012 -- "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 Arizona Small Business Loan Rejections by Bank
Bank of America 40.00%
Chase Bank 35.00%
"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.