This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Bank of America's Small Business Spin

Stocks in this article: BAC

Bank of America story updated with response from the bank and analyst commentary.

NEW YORK ( TheStreet) -- Bank of America (BAC - Get Report) really wants us to think it is doing its part to boost small business, but what is it doing, exactly?

A press release from the bank on Wednesday declares it is "taking another step in its ongoing effort to encourage small business growth," by, um, hosting a series of talks by Malcolm Gladwell, a best-selling writer from The New Yorker Magazine.

Malcolm Gladwell

Gladwell told The Atlantic "the speech in question was about the history of the rock band Fleetwood Mac," but apparently at least one small business owner found it inspiring.

"Malcolm Gladwell has been a source of inspiration for me and my business for many years. I was thrilled that Bank of America provided the opportunity for me to hear his perspective on how hard work leads to business success," said Tom Kristof, founder of the Sozo Center for Assisted Living and Advancement in Gainesville, Texas in Bank of America's press release.

This is all a bit strange, but if Bank of America's public relations folks think it worth promoting, that's their business.

However, other than hosting talks by Gladwell, it isn't clear what else Bank of America is doing for small businesses.

It certainly doesn't appear to be lending, for example. Bank of America had $17.5 billion in small business loans (including credit card lines) outstanding at the end of 2010. That number fell to $13.6 billion as of Sept. 30, 2011, a drop of 22%, according to the bank's regulatory filings.

Bank of America spokesman Jefferson George points to quarterly dataBank of America began publishing on its website at the end of 2010 which he argues show the bank has actually stepped up its small business lending. According to those figures, which aren't part of the bank's regulatory filings, Bank of America extended $2.9 billion in credit to small businesses in the first quarter of this year, $4.8 billion in the second quarter and $5.3 billion in the third quarter.

George took issue with the figures used by TheStreet, which describe Bank of America's small business loans outstanding.

"That is credit used by borrowers and speaks to what small businesses are drawing upon in their credit lines, not the credit that banks approve for borrowers," George wrote to TheStreet via email. "Using those figures to describe how much banks are lending to small businesses is inaccurate and inappropriate, and I haven't seen other reporters or even opinion writers do it."

However Richard Staite, analyst at Atlantic Equities, believes the net outstanding loan amount "is a more telling indicator of how tight credit is for small companies."

According to Staite, "all banks will highlight the gross amount they've extended to small business because they're under pressure from politicians to show their continued support to these small businesses."

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,678.70 +6.10 0.03%
S&P 500 2,057.09 +5.27 0.26%
NASDAQ 4,771.7630 +13.8840 0.29%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs