3 Things You Should Know About Small Business: May 23

NEW YORK (MainStreet) -- What's happening in small business today?

1. The best banks for small-business loans. Which banks lend to small businesses the most? Not surprisingly, community banks. A new tool called Banking Grades by the Philadelphia-based company MultiFunding found some of the biggest banks have the worst performances in terms of how much small-business lending they do as a percentage of their domestic deposits.

Among the 10 best banks for overall small business lending, Farmers State Bank of Hosmer, South Dakota, Community Bank of Nevada, Iowa, Farmers And Merchants Bank of Milligan, Neb., First Resource Bank of Savage, Minn. and Wright Express Financial Services Corp. of Midvale, Utah rounded out the top five.

Some of the "larger" banks that fared well include Zions (ZION), Synovus (SNV), JPMorgan Chase (JPM) and Wells Fargo (WFC).

"In our opinion, big banks are not well equipped to lend to small businesses," Ami Kassar, founder and CEO of MultiFunding, which helps small businesses find the best loans available to them, tells the Huffington Post. "They are simply too bureaucratic and complex to handle small-business loans well."

The Financial Service Roundtable weighed in on the tool. A spokeswoman said the tool "myopically ignores commitments," referring to 13 major banks that recently announced a $20 billion commitment to increase lending to small firms in under-served communities.

2. Small businesses are not taking advantage of a health care tax credit. Only a fraction of small businesses took advantage in 2011 of a tax credit meant to help them afford employee health coverage, a recent report by the Government Accountability Office has found. Small employers say the nuances of the credit are too confusing to get through, according to a CNNMoney wrap on the GAO findings.

The GAO report cited between 1.4 million and 4 million small businesses that were eligible for the health care tax credit, but just 170,000 claimed the credit last year.

The report said the credit wasn't "large enough to incentivize employers to begin offering insurance," with the average credit being $2,700.

The formula used to determine the credit also includes "odd features, such as counting some workers as 1/15th of an employee and reducing federal help if a firm insures more workers," according to CNNMoney.

The GAO suggests that the Internal Revenue Service revise its procedures. That being said, a June ruling by the U.S. Supreme Court on the constitutionality of mandating health care coverage could mean the tax credit program gets scrapped altogether.

3. Lessons from the GM-Facebook breakup. By now its old news that General Motors (GM) decided to cut its advertising ties with Facebook (FB). But what lessons can small businesses learn from the decision and does it mean that other businesses should cut ties too?

According to a blog post on IdeaCafe, just because GM wasn't able to monetize on its $10 million advertising investment doesn't mean that others are also doomed.

"If you take away anything from the breakup, realize that online initiatives involve many factors, making each account and approach unique," IdeaCafe says. "Don't follow the endeavors of others; rather, situate endeavors sensibly into existing marketing plans."

-- Written by Laurie Kulikowski in New York.

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