Small Business Lenders Find a Profitable Niche

Banking consolidation has been in full force for the past 20 years. According to the FDIC, the U.S. went from 12,343 commercial banks in 1990 to 7,402 in 2006. This offers opportunity to lenders focusing on small business.

With larger banks becoming more prevalent in the marketplace, many small business owners worry that the time-tested practice of building a relationship with a banker will become outdated – another casualty of progress.

According to a recently released study by the SBA’s Office of Advocacy, entitled The Value to Banks of Small Business Lending, small commercial and industrial loans, particularly those under $100,000, add more market value to the smallest banking organizations with assets less than $500 million. In other words, banks that concentrate on a small business niche can realize significant profits and increase their overall market value.

The full study may be found at www.sba.gov/advo/research/rs301tot.pdf.