Best banks for small businesses: the nation's top 100 microloan lenders

Entrepreneur, July, 1997 by Cynthia E. Griffin

Glover cites a number of reasons for the lending increase. "A lot has to do with an increase in lending to women," he says. "More women are starting businesses, and bankers are beginning to realize they are good loan risks."

The SBA's LowDoc program, which encourages banks to make small loans with reduced paperwork, is at the center of another change, adds Glover. It showed bankers that it's cost-effective to make such microloans (which are less than $100,000). Now banks are taking the initiative and making these loans on their own.

The study used three new criteria to rank the top microbusiness-friendly banks. Consequently, a broader view of the lending climate is presented.

"The old ranking system favored very small banks. Now we're using four factors that give a more balanced view," explains Glover. As a result of the new evaluation criteria, 20 larger banks were included in this year's study.

The four variables measured are: 1) microbusiness loans-to-assets ratio, 2) microbusiness loan-to-total-business-loan ratio, 3) dollar volume of microbusiness loans, and 4) total number of microbusiness loans.

Armed with the study's information, says Glover, you can find the banks in your community that have made microloans in the past - and will be more likely to do so in the future.

The following ranking lists the SBA's top two microbusiness-friendly banks in each state (where there were two) as of June 1996. The listing also includes banks whose microloans-to-assets ratio was 40 percent or higher.