Monday, February 04, 2008

Report Card on SBA Loans to Minorities

The Greenlining Institute produces an annual report card that grades the largest US banks on their SBA lending activities to minorities – specifically African Americans, Asian Americans and Latinos.

Only one bank got an “A”. There was a handful or so of “B” grades. As for the rest, they got a spanking on their hands with a ruler.

You can read the full report, but here’s a couple of highlights:

  • No bank met Greenlining’s challenge to originate 60% of all its SBA loans in 2006 to minority entrepreneurs, split equally amongst African Americans, Asian Americans and Latinos. Citigroup came close at 56%. Bank of America scored #1 for largest number with 5,468 SBA loans to minorities.
  • African American small businesses are the most underserved by financial institutions in terms of both the number and percentage of SBA loans originated to this group compared to other groups in the study. Bank of America was at the top of the list in both the number of SBA loans and the percentage of its SBA loans.
  • Citigroup and PNC did the best in percentage of SBA loans to Asian Americans both surpassing Greenlining’s minimum lending goal of 20%. Bank of America was tops in the number of SBA loans to Asian Americans.
  • Close, but no cigar for Citigroup who came close to meeting the 20% goal for Latinos with Bank of America not far behind. Bank of America had more than twice the number of SBA loans to Latinos than second place J.P. Morgan Chase.
  • Three banks received overall “F’ grades – Key Bank, Capital One and Fifth Third. Ouch!

At the end of the day, the Greenlining Institute says the number of minority owned businesses in the United States is growing at two or three times the national average for all U.S. businesses, but the proportion of SBA loans going to minority entrepreneurs has remained constant at one-third of all SBA loans.

According to the Greenlining Institute, if banks would originate 60% of their annual SBA loans to minorities, this would double the number of SBA loans to minority owned businesses.

Here are two questions I have on this report card.

  • Does it take into consideration the demographic and geographic footprint of each respective financial institution?
  • What were the actual approval rates for SBA business loans to minorities of each respective financial institution?

Check out my earlier blog postings for other resources on loan program directed minorities!

Need help finding the right lender or telling your story the right way? Read "Matchmaking for Business Loans" and give me a call!

Tags : SBA loans , minorities , African American , Asian , Latino , Greenlining Institute

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