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Small Business California President Scott Hauge on Bank of America ending some small business customers’ lines of credit and telling them to pay the...
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Bank of America.
Never ceases to amaze first there were those sixty dollar your debit card fees they try to get out of consumers'.
And now other cutting lines of credit to some small business owners demanding they pay off their balances in full all at once or except new -- sometimes.
With higher rates of interest.
This is the same Bank of America they got 45 billion dollars in TARP bailout money the big argument at the time for the bailout.
Was that it was needed to lend to small businesses.
Joining me now Scott how -- you.
Small business California Scott welcome to the show thanks for being with us today what is really going on here what does Bank of America doing to small business clients.
Well what they're doing is third terminating a lot of their customers.
Lines of credit.
And these are customers -- -- with them for a number of years and aren't necessarily.
Late on their payments they've just got notice instead.
Your line of credit is gonna be cut in pay up in the next couple of months.
So these are people who want -- off -- -- to -- enough -- lumber for some reason.
I assume it's because bank in America is trying to trying to reduce its its -- exposure to small business out there they're saying hey we need this money back.
Are they telling people why -- why they're making this controversial move.
Well they're saying that there were reevaluated.
-- value.
Reevaluating their lines of credit.
And that these people -- are not eligible any longer and they're not giving -- in a lot of cases proper notice.
Well.
I think what's interesting here is is I can't imagine any group of businesses that more relies on that -- a credit to small businesses.
What's gonna happen some to some of these operators of the gonna go out of business -- are we gonna lose some folks because they don't have access to capital.
Well I think what's gonna happen is obviously it's gonna impact the cash flow.
Which is going to impact their credit air and a lot of -- -- them being able to expand -- bad jobs and worst case scenario they're gonna cut jobs and some may go out of business.
OK on that let me read -- Bank of America statement because we want to be fair we we -- Bank of America to come on tonight they were not available however they did give us his statement.
From Jefferson George -- was at Bank of America spokesman here's what he said.
We are not cutting -- closing credit lines for our small business clients across the board.
For a very small percentage of our customers we've put in place their lines of credit some standard.
The practices such as a maturity date and annual renewal process these changes were explain -- letters to affected customers at least one year in advance.
The new maturity date now is that you're understanding -- of these people -- at twelve months' notice.
Well that's what Bank of America's saying however the small businesses I'm talking to have said they've only gotten two to three months.
But the other aspect of -- -- so long term customers.
And what I don't understand is why didn't their banker pick up the phone call -- recognizing how important it was to these businesses to keep their line of credit.
Exactly note personal service is always a nice thing when -- losing access to capital.
I didn't say you know I would think the small businesses -- an easier target than than larger businesses does it surprise you at the end of the day.
But it's folks with that smaller means smaller business lines that can they're actually taking this hit.
Well smaller businesses don't have the ability to get their story out there there -- -- business out there and they feel alone and these actions we have taken.
And it never gets reported to the public him and them the most.
Well that's what we're here -- and that's what we're here smartest -- -- so what we -- easily and we're also very small.
Write a part of their loan portfolio.
I would yeah certainly smaller than some of the big fortune 500 companies out there is what did you tell folks -- one number here.
Because -- Federal Reserve board did some.
Surveying and they found that 57% of bank loan officers say reduce they had -- reduced tolerance for risk.
Yeah -- -- -- concerned about the banks themselves that they're worried about lending that small business operators are still complaining about not enough credit.
It seems we should be at a point in the economy.
Where were expanding not contracting what does this tell you about the lending business is -- Bank of America or all banks.
Well what you've got is a situation where everybody's pointing fingers at everybody else I think the larger banks.
Com are cutting off their -- loans more so the smaller banks.
-- to credit just came out last month they get a thousand dollar loan per thousand loan applications.
And found that large banks approve nine point 2%.
Small banks approved 46%.
Wow and I think -- dip financing approved 61%.
Aren't so you know from nine point 2% to 46%.
And they're both banks they're -- from the rich state.
Well I think that's a moral of the story for a lot of small business operators had -- go to small bank.
Scott thanks for coming in tonight as an important story gonna continue to follow it.
Thank you very.
