Big Banks and Small Business

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Attention small-business owners: big banks love you.

It says so right here and here.

I know that may seem hard to believe given their history of wanting nothing to do with lending you money. Assessing the risks of loans to small businesses can be a colossal pain and servicing them is even more so, especially in light of their relatively small return. But that's different now, apparently.

Yes, as that first article from American Banker points out, big banks like SunTrust, Wells Fargo and PNC Financial Services are dying to establish a relationship with you by giving you loans. Well, SBA-backed loans at least.

And, as the second article from Inc.com this morning says, even the largest bank in the country by assets, Bank of America, is adding 1,000 bankers over the next 18 months to serve the needs of small businesses.

But pardon me if this doesn't all seem like a bunch of PR fluff. It's no secret that banks have been in damage-control since the credit crisis subsided and the noble act of lending to small businesses is a favorite talking point.

In regard to B of A, it employs nearly 300,000 workers, according to its Yahoo! Finance profile. Does adding less than a half percent to that total over a year and a half really merit a press release? Plus, B of A has said those bankers, in addition to selling credit products to businesses, will be offering payroll, cash management and retirement plan services. Those are no-risk offerings on the bank's part.

As for pursuing SBA lender rankings, that's just another trophy for the marketing department to show off.

Here is the key for big banks when it comes to SBA loans, as I see it: 'SBA loans offer many attractions," American Banker wrote. "They require little or no reserves since the government is responsible for the bulk of any losses. Banks can also sell them in the secondary market, where guaranteed SBA loans are fetching premiums of 11% to 12%.'

Wow. Banks willing to make loans they aren't responsible for the losses on and can easily get off their books? It's the same reason why nearly 90 percent of newly issued home loans are those Fannie Mae and Freddie Mac can buy.

I can definitely feel the love.

Matt Quinn contributes to the Wall Street Journal's corporate finance blog. He has also written extensively about banking and corporate finance for publications including Inc., American Banker, and Financial Week. He lives in Brooklyn, New York.