A new study of 1,000 small businesses revealed that several national banks were among those that rejected the firms’ funding requests in New York the most.
Biz2Credit, a New York company that connects small and medium-sized businesses with lenders, said Chase, Citibank, Bank of America and TD Bank customers frequently rejected applicants for funding in New York.
Chase Bank topped the list of small business loan rejections in New York at 32.63% followed by Citibank (15.79%), Bank of America (8.42%) and TD Bank (7.37%).
“We are finding that the same banks that were lending to small business owners before the credit crunch essentially closed the spigots on entrepreneurs” said Rohit Arora, CEO of Biz2Credit, who said he oversaw the research based on applications made on the online platform over the past two years. “Why did they stop lending, and when will they get back into the game? The economy was better in 2010-11 than it was in 2008-09.”
The small businesses examined in analysis included only businesses in operation for more than two years, had credit scores of 650 or higher, and had an existing banking relationship, according to Biz2Credit.
The information is based on loan applications made during 2010 and 2011, the firm said.
“The businesses we looked at are survivors that made it through the recession” Arora said. “When they approach [the] smaller banks, credit unions and alternative lenders, they are getting money. The big banks are sitting on their assets.”