Small company loans could very well start getting more affordable, and the U.S. unemployment rate could be affected. The nation’s second-largest bank announced Wednesday that it will lower the interest rate on small business lines of credit for companies that hire new employees. Small business lending has been a hot button issue as credit stopped while banks were bailed out by the government. Banks have resumed raking in billions while small company continues to struggle and unemployment remains high. Pressure from the public may be starting to have an effect on loosening credit.
All of the hiring incentives of small company loans
Small business hiring incentives from J.P. Morgan Chase and Co. contain lowering its interest rate by 0.5 percent on a new business line of credit for each new employee hired, for up to three employees, for the life of the loan. It was reported by Zacks.com that J.P. Morgan may also provide discounts to small businesses for opening checking accounts. Also, J.P. Morgan plans to hold conferences in 11 cities across the country to help local and small business owners to improve their sales figures and fund their businesses.
Are businesses ready to hire with all of the banks ready to loan?
Politicians and the public at large have scorned banks that received government assistance, yet refused to make small company loans to help reduce unemployment. It was reported by The Wall Street Journal that bankers have offered the excuse that there’s not enough demand from credit-worthy borrowers. And it’s true that losses from small-business loans have been severe at major small-business lenders. But Kevin Watters who’s from J.P. Morgan Chase told the Journal that the economic outlook among small company owners has improved and small companies are ready to expand and hire.
Small businesses have help offered by other banks
Several banks have started to make more small company loans. J.P. Morgan said first-quarter loans to small companies rose around 31 percent from just a year earlier, to $ 2.1 billion. Bank of The US, reported that small company loans rose 18 percent from a year earlier to $ 19.4 billion. Many banks, including J.P. Morgan, U.S. Bancorp, PNC Financial Services Group Inc. and Capital One Financial Corp. are giving some of their previously rejected small-business loans a second look. Two years ago U.S. Bankcorp started training about 3,000 bank managers all about more small company lending.
Chase keeps its word on small business loans
The J.P. Morgan Chase offer to cut its rate of interest for companies that are going to hire new employees is accessible for business lines of credit up to $ 250,000. It was reported by MarketWatch the offer is also accessible for existing customers who hire new employees to increase their lines of credit by $ 10,000 or more. Chase business checking customers are going to receive an additional half percent discount on their loan rates for hiring new employees. The offer makes good on a promise J.P. Morgan Chase made late last year. The bank announced it planned to increase its lending to small companies by $ 4 billion in 2010 to a total of $ 10 billion through access to working capital, term loans for expansion, commercial mortgages, lines of credit and also with some business credit cards. It plans to hire 325 new business bankers.
More info about this topic at these websites:
zacks.com
zacks.com/stock/news/36284/JPMorgan+Motivates+Small+Businesses
TheWall Street Journal
online.wsj.com/article/BT-CO-20100629-713817.html
Marketwatch.com
marketwatch.com/story/hire-a-new-employee-chase-will-lower-the-interest-rate-on-your-business-loan-2010-06-30?reflink=MW_news_stmp
