Small business finance is a hot topic these days. It seems like there are endless stories about the need to help small businesses expand, get loans, pay less in taxes, hire more employees, and save the economy. But, it is hard to determine if all this talk actually turns into action that can help small businesses get the banking services they need and the loans they need in order to grow and thrive. If you’re in the process of trying to obtain a small business loan, or even if you’re just thinking about it, the following resources can help.
One of the key factors that will help mitigate the frustration of a loan process is picking a bank that is already pre-disposed to helping its community and to making small business loans. The MultiFunding Bank Grades tool can help you do just that. Simply enter a zip code, or your City and State into the search tool. It will then return a ranked list (A to Z) of all the banks in the area based on their record of small business lending. (A small business loan is defined as under a million dollars.) Banks with a grade of A use 25% or more of deposit assets to make small business loans, those with an average grade of C use 6-10%, and failing banks with a grade of F use under 3%.
Once you’ve narrowed down your list of possible banks, you can do further research on them using the FDIC Bank Find tool. Enter the name of the bank, along with its city and state in the form and click “Find.” If the bank is governed by the FDIC you’ll see the Your Bank at a Glance screen. If it is not found, you can make the search broader by removing the city and state. If it is still not found, then it isn’t FDIC insured, and you should probably look elsewhere.
The Your Bank at a Glance page provides basic information about the bank such as its headquarters address, website, FDIC insurance certificate number, and historical data. It also provides links to a number of useful reports about the bank including detailed financial reports. You can also access the Bank Compare tool which allows you to compare two banks on a number of detailed statistics from assets and liabilities to loans and loan types, to bank assets. (NOTE: You’ll want to make note of the Bank Certificate numbers located using the Find tool to use the compare tool efficiently.)
Another useful tool provided by the FDIC is the Community Reinvestment Act (CRA) Performance Ratings search. The CRA is an evaluation of a bank’s record of meeting the credit needs of its entire community, including low- and moderate-income neighborhoods, consistent with safe and sound operation of the institution. Banks are rated from 1 (Outstanding) to 4 (Substantial Noncompliance). You can also add fields to the report to view a bank’s rating for Lending, Investment, and Service. Use the tool to search banks by city and state, or just state. You can also limit the search by rating. For example, you could search for all banks in Colorado rated outstanding. The resulting report will display data about each bank, and the final column will provide a link to the latest CRA report if available.
While none of these tools can guarantee that you’ll apply to a bank willing to make a loan to your small business, they can help eliminate those with which you don’t want to do business as well as those that are not likely to lend to your company. After that, all you can do is make your best pitch and hope that the bank sees the value in your business plan.