Some banks drop SBA micro loans

NEWARK, N.J. (3/30/05)--Some community banks are dropping certain business credit and credit-related products and services, including Small Business Administration (SBA) micro loans, according to a survey of community bankers.

Among the five most commonly dropped business products during the past 12 months, SBA micro loans clocked in the No. 5 position, with 4.1% of banks surveyed dropping these loans, says the Community Bank Competitiveness Survey 2005, commissioned by the ABA Community Bankers Council and ABA Banking Journal.

Other products dropped, in order of most common to least commonly dropped were: factoring products and auto leasing, tied with 6.9% of banks surveyed dropping these products; equipment leasing, 6.6%; and state-guaranteed loans, 4.7%.

Construction loans and commercial mortgages are the most commonly offered business credit-related products, with each offered by more than 94% of banks surveyed. Commercial term loans were offered by 91.6%.

More than 84% offer credit lines to businesses, 80.6%, working capital loans; 52.5%, SBA 7(a) loans; 50.3%, accounts receivable financing; 48.8% merchant card processing; and 45%, SBA 504 loans.

Business credit cards are offered by only 35.3% of the community banks surveyed. SBA micro loans are offered by 27.5%, equipment leasing by 26.3%, state-guaranteed business loans, 24.7%, business auto leases, 9.4%, and factoring, 6.3%.

The banks most often named commercial mortgages as their most profitable business service. Least profitable was merchant card processing.

A comparison of business credit cards vs. consumer credit cards offered indicates that fewer banks offer business credit card service (35.3%) than offer consumer credit card service (45.3%).