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Wells Fargo, the Small Business Bank

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By Neetal Parekh on September 28, 2009 12:50 PM

The results are in, and the winner can be announced.  In a tally of the amount of loans that banks made to small businesses in the past year, Wells Fargo came in fchart_sba_lenders.gifar ahead of its competition. 

Wells Fargo upped its loaning from $583.4 million in 2008 to $605 million in 2009-- a 4% increase.  In fact, it was the only bank to post an increase in lending to small business.  In comparison, CIT and JPMorgan Chase & Co. decreased loan amounts to the small business sector by over 70%.  For CIT the decrease has been staggering.  In 2008 CIT loaned nearly $700 million to small business, whereas in 2009 it did not even cross the $100 million mark.

So, how did Wells Fargo manage to stay ahead?

CNNMoney reports that Wells Fargo was able to keep ahead of the economic downturn and resist waving off small business loan requests by not reselling loans on the secondary market, a popular action taken by other banks.  The problem with the resale, was that after the fall of Lehman Brothers' last year, the secondary markets froze and banks who had offered up the loans could not find buyers.  Without buyers, the banks were left without a funding source to be able to offer new loans geared to small business.

Wells Fargo is also credited with zeroing in on offering 7(a) loans--that can be taken out for up to $2 million.  Best of all the 7(a) loan is a type of small business loan that the Small Business Administration (SBA) guarantees--reducing the liability of the lender.

All in all, Wells Fargo appears to be lone lender voice for small business for 2009.  And as other banks learn from Wells Fargo's success---2010 might just prove to be the comeback year for small business banking.                                                                                            

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