Why Not to Get a Small-Business Loan at a Big Bank

NEW YORK (TheStreet) -- After the recent negative response to an article on Bank of America's (BAC) small-business lending efforts, we decided to ask a few more industry sources on what is really going on at the big banks.

Ami Kassar, CEO of MultiFunding, a broker for small-business loans, says big banks are far from the best place for a small business to get a loan.

MultiFunding helps small-business owners get the best possible loans at the lowest possible prices. The firm helps small-business owners understand their options in the marketplace and works with them to make sure they're getting the best possible deal from the bank or the lender, Kassar says.

The company works with hundreds of lenders, including large, small and community banks, credit unions, asset-based lenders, accounts-receivable lenders, equipment lenders and merchant-cash lenders, among others.

Last month, MultiFunding launched BankingGrades.com to grade every FDIC-insured bank in the U.S. based on how many small-business loans it makes.

The inaugural report found that some of the nation's biggest banks have the worst performances when it comes to small-business lending. And which big banks were among the worst? Bank of America, JPMorgan Chase (JPM), Citigroup (C), Bank of New York Mellon (BK) and HSBC (HBC).

Banks that had the best small-business lending performances tended to be community banks, it says.

We asked Kassar to elaborate on what he's seeing in the small-business lending space.

What is the typical business you work with?

Kassar: Typically our small-business clients that we work with [have] $2 million of [annual] revenue or less. They don't have a CFO in place. So the owner of the business or the CEO of the business is acting as the CFO as well. We believe that the businesses that we work with represent the definition of a true small business. There is something in to the tune of 26 million small businesses in the United States ... There are different statistics, but the vast majority of them have revenue of $1 million or less.

So is that the definition of a small business?

Kassar: There are a lot of different definitions about what constitutes a small business loan, which makes the data really confusing and difficult to read.

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