The Pue family business lives by its line of credit.
Air compressors need to be bought and sold, stacks of metal wires and springs restocked, and bulky machinery delivered around the Carolinas. Business has been steady at Engineering Sales Associates, a 19-employee shop that brings in about $5 million a year in revenue.
The company is a prime representation of Bank of America's new push into small-business lending. The bank recently sent a video crew to the warehouse for an internal video.
Seventeen months after CEO Brian Moynihan pledged to the White House that the Charlotte bank would increase lending to small businesses, the bank is touting its numbers.
New loans to businesses with less than $20 million in revenue increased 20 percent in 2011, to $6.4 billion, the bank reported recently. Among businesses with less than $5 million in revenue, lending increased 63 percent in the fourth quarter from the one before.
Bank of America is also nearly three-quarters of the way through hiring 1,000 small-business bankers around the country to provide personal service to existing customers and drum up new business.
It's the first time the bank has had feet on the ground specifically to serve the country's smallest businesses. And at a time when Bank of America is cutting back dramatically in other areas of its business, it represents a significant investment.
"We have noticed a difference," said Arthur Pue, the second generation to work at Engineering Sales Associates. He says the bank is more accessible now. "My father had this company for 51 years. ... He spent more time courting bankers than he did running the company."
Economy watchers have long awaited the return of business lending as a signal of the recovery, and most of the recent results were encouraging. The Federal Reserve said that business lending across the board increased 10 percent last year after two straight years of declines.
But many of the country's smallest businesses are still struggling to improve their sales and pay down debt.
And Bank of America's competitors say the Charlotte bank is a bit late to the game in hiring bankers specifically to serve small businesses, even as they all compete to gain market share in what they view as a significant opportunity.
Moynihan announced the initiative in October 2010, during a luncheon at the Chief Executive Club of Boston. It came soon after the bank was one of 13 to pledge to the White House and the Small Business Administration to increase small-business lending by a collective $20 billion over three years.
Since then, small business has continued to be a focus for Democrats and Republicans.
President Barack Obama mentioned the sector several times in his State of the Union address in January, pledging to "pass an agenda that helps them succeed."
The U.S. House and Senate are considering a bill that will reward small businesses for expanding, and both houses passed a bill last week that would help them raise money.
"There's never been a better time to be in this segment," said Robb Hilson, the Miami-based executive put in charge of Bank of America's smallest business clients. His position was expanded in an October reorganization.
There are some indications that small-business lending is rebounding. The Thomson Reuters/PayNet Small Business Lending Index, a broad measure, is still posting more than 15 percent year-over-year gains.
Hilson said the Charlotte bank expects to maintain double-digit lending increases over the next few years.
To do that, the bank already has hired about 700 small-business bankers around the country, including some in the Charlotte area, that are cold-calling businesses and setting up meetings with potential clients.
A number of them have been brought in from outside the company. Bank of America expects to have hired 1,000 small-business bankers by the end of June.
"They're out in the community spending time visiting companies – customers we bank and those we do not – and really trying to help play a role in the community we serve," said David Solis, national sales executive for the client development group in Charlotte.
The bank also has rolled out dozens of new products for small businesses, including payroll software and, this week, a 401(k) plan.
Even before the current initiative, the bank had 4 million small-business customers.
A year ago, "we would have certainly served your very, very basic needs," Solis said. "Would it have been advisory? Would it have been comprehensive?"
But small-business lending is still only a tiny fraction of business for a bank that held more than $925 billion in loans at the end of 2011, according to its annual report. At smaller banks like Charlotte's Park Sterling Bank, the percentage can be around 20 percent.
Some banking consultants criticized Bank of America when it announced its initiative, saying it was behind its peers in creating a small-business banker position.
In the years since Wells Fargo acquired Charlotte-based Wachovia, the bank has developed a system of small-business bankers similar to the one Bank of America is now creating. A team of "business champions" handles companies with less than $5 million in revenue, while "business bankers" deal with companies from $5 million to $20 million, said Terry Renegar, community banking president at Wells Fargo.
Wells hired 1,300 small-business bankers in 2009, and 700 more in 2010.
"When you hear that 'XYZ bank' is hiring 100 more bankers, the question is 'Why are you doing this now?'" Renegar said. "We have these people in our stores, who know what they are doing. You can't ever disengage with small business. If you do, it's a fatal flaw."
BB&T said it has long had a system similar to the one Bank of America is developing. It serves its smallest clients through its branches' financial center leaders, and has small-business bankers that oversee a few branches, said Mark Edwards, who heads small-business lending at the Winston-Salem-based bank.
The bank does not segment out small-business lending in its financial reports, but the bank has regularly been near the top of Small Business Administration loans in North Carolina in recent years. The state SBA office ranked it the top state lender of the year.
"We don't have a renewed focus. We have maintained our focus," Edwards said. "If you have to say you're renewing your focus, that means you took your eye off of it, and we have not."
The bank is still hiring small-business bankers and has not finalized how many small-business bankers will be in the Charlotte area. The ultimate impact of its initiative is not yet clear.
Bank of America's own data tell a conflicted story about whether small-business lending as a whole is up or down.
The bank's total credit extended to small businesses in 2011 was down slightly from the year before. And the amount outstanding in small-business loans as defined by the FDIC fell to $24.8 billion as of Dec. 31 at Bank of America, down from $25.8 billion the year before, according to call report data. At Wells Fargo, the number fell to $34 billion from $36.4 billion.
That's because many small businesses are still battling with the economy and have been focusing on paying down debt instead of taking on more. It may take awhile for the effect of new customers to show through the data.
"I think banks are definitely more interested in lending to small businesses than they have been," said Dale Harrold of Self-Help Credit Union in Charlotte, who manages a small-business loan fund that partners with banks.
"In terms of whether or not they're looking at very small businesses, which would be loans under $500,000 or so, I don't see a lot of activity in that sector, but I wouldn't necessarily see it yet."
Boost your loan chances
Bankers offer these tips for improving your chances of getting a small-business loan:
Get to know your banker. Banks are more willing to lend if they have a relationship with you, understand your business and how you plan on achieving your goals. "We've got to understand where you're going and how you get there," said Bob Marshall, business banking senior vice president at Wells Fargo.
Research the bank you will be approaching. Does it participate in SBA loans? What does its lending portfolio look like?
Plan for the unexpected. Understand how your business would be positioned for another downturn in the economy.
Take the long view. Have a one-year and a three-year business plan ready.
Demonstrate consistent cash flow. Remember, a bank is not an equity investor with an appetite for risk. If your company is just starting out, consider alternatives like venture capital or friends and family.
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