The Citigroup has made it clear that it is focusing on US companies having less than $20 million in annual sales. It also seems determined to hire about 200 bankers by end of 2010. This step shall bring the small business bankers number to 500.
Raj Seshadri, head of New York based Citigroup in an interview says, “We feel we can help business owners in the economic recovery, and there’s money to be made for our shareholders.” It is possible to have floor plan financing, receivable lending and lines of credit for businesses in order to make payroll.
Four largest U.S. banks that include Bank of America Corp, Wells Fargo & Co., JPMorgan Chase & Co. had to face a lot of criticism from entrepreneurs for reducing credit layouts to small businesses after garnering $140 billion of federal bailout money. Adequate financing is not received by 21 percent of small business owners that shows an increase of 22 percent in the last two years. This is according to the July report of National Small Business Association. A $30 billion program has been signed by President Barack Obama that will allow community banks grant loans to small companies. Obama is quoted saying, “When our small businesses don’t do well, America doesn’t do well.”
The Independent Community Bankers of America says that banks having less than $10 billion in assets amount to 56 percent of the country’s small business loans. The Bank of America having $2.34 trillion of assets is planning to hire 1,000 employees to help out companies having sales of $3 million or less. The Citigroup that had to receive $45 billion bailout in 2008, still had 12 percent ownership of taxpayers. The bank, however, has an overall asset of $2 trillion.
Small business lending is not really very risky. While bank regulators do not go into compiling of default rates, big lenders have reported charge-offs of 4 to 14 percent. Vikram Pandit, Chief executive officer, Citigroup Inc says, “We believe small business lending is important. Small businesses are at the heart of America’s economy.” He also discussed about the banks ability to serve the big multinational firms in the world. In the current year, Citigroup has made around $4.5 billion of small business loan grants to the US. This figure includes loans, credit lines, and credit-card lines along with financing for small companies. Citigroup has 1000 North American branches that are spread out in places like Florida, Illinois, California and Texas.
This article was submitted by Rohit Arora, co-founder of Biz2Credit. Biz2Credit is a small business marketplace that connects entrepreneurs with financing options and advice to grow their business. Send all questions to