Walking the Walk on Small Business Leadership
Friday January 20, 2012
The mobank “Go business. Go.” campaign is all about small business success, driven by the passion and effort of Main Street entrepreneurs. In telling that story, mobank has touted its support for small business.
Once again, there is independent confirmation that mobank support for small business is demonstrated by actions, not just words. A national small business consulting firm has ranked mobank in the top 3 percent of banks in the country for small business lending.
MultiFunding, a firm that helps small businesses explore financing options, gives annual grades to 6,800 U.S. banks, based on the percentage of their deposits loaned to businesses with balances of $1 million or less. The organization reports that the average bank in America uses 8 percent of their deposits to make small business loans, and they give an “A” grade (Excellent) to banks that use 25 percent or more of their deposits to make small business loans.
MultiFunding Report Card shows mobank lending 54.4 percent of its deposits to small businesses. This earns mobank an A grade and places it in the top 3 percent of banks in the country for small business lending, ranked 173rd out of the 6,800 banks reviewed.
The MultiFunding Report Card was the subject of a recent article in The Wall Street Journal editorial page “debate” between the firm’s CEO and a representative of one of the nation’s five largest banks. MultiFunding’s Ami Kassar argued that the Big Five banks “should be ashamed of their lending record to small businesses,” citing FDIC figures showing the Big Five holding 40 percent of all domestic deposits but making only 16 percent of all small business loans.
The big bank representative argued that too many small business loan applications represent unacceptable risk. “Some applicants seem very likely to have difficulty repaying their loan,” he said.
“We work hard to find small business owners who present a prudent risk,” said mobank President and CEO Grant Burcham. He pointed out that while mobank is lending more than half of their deposits to small businesses, their loan volume is up 9.2 percent for the quarter, 13 percent for the year. As for risk, mobank’s percentage of problem loans was among the lowest, only 0.24 percent, and a healthy return on assets of 1.07 percent year to date. On a national level, that places mobank in the top sixth percentile of banks its size ($300 million to $1 billion in assets) for having the fewest non-performing loans.
“We are successful at small business lending because we work differently than big banks,” Burcham said. “We know and understand our customers better, because we live and work with them in the same community, and most of our loan officers have actual small business experience, not just bank experience. We give our small business customers the advice, the tools and the networking connections they need to succeed.”