From the best to the worst: Report reveals best lenders for Black businesses.

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Author: Townes, Glenn1

PNC Financial Services Group Inc. and M&T Bank Corp. are among the largest grantors of Small Business Administration loans to African-American-owned businesses, while Wachovia Corp. and Citigroup Inc. were at the bottom of the list, according to a recently released national study by the Greenlining Institute, a public policy research group based in Berkeley, California.

The report, "Failing to Make the Grade?: Bush, The Small Business Administration and the Banks; An Analysis of 2005 SBA Lending by the Nation's Largest SBA Lenders," ranked lenders with more than $50 billion in assets that made more than 200 SBA-backed loans in fiscal 2005. According to the report, PNC Financial Services granted 7.7 SBA-backed loans to African-American businesses per $5 billion in total assets, while M&T issued 7.5. Wachovia and Citigroup issued less than one loan to African-American businesses per $5 billion in assets. However, based on the total dollar amount loaned to African-American companies, the study shows that Bank of America and PNC are at the top of the list, while Sun Trust Bank Corp. and Citigroup are at the bottom. All four lenders, with the exception of Sun Trust Bank Corp., have a major presence in the New York and New Jersey metropolitan area.

Minority-owned businesses received about 29% of all SBA loans generated in 2005, according to the study. Last year, African-American-owned firms received only 3% of SBA loan dollars; Latinos got 7% and Asians received 20%. While other large banks such as HSBC and U.S. Bancorp, each with a large New York and New Jersey presence, received passing grades from the Greenlining Institute, major lenders are still far off the mark when it comes to lending to minority businesses.

"We would like to see about 60% of all SBA loans go to minorities: 20% to African-Americans; 20% to Latinos; and 20% to Asian-Americans," said Vina Nguyen Ha, program manager for economic policy at the Greenlining Institute and author of the report. Ha said that part of the problem is that the SBA's 2006 budget has been slashed in half since President Bush took office and is about $123 million less in 2005.

"We believe that the SBA can do a lot more to assist the growth of minority-owned businesses," Ha said. In response to the Greenling study findings, representative of Citigroup questioned the numbers and defended its commitment to financing small and mid-sized minority-owned enterprises.

"I question the validity of the numbers and figures highlighted in the report," said Ginger Siegel, director of Business Banking for Citibank-North America in New York. "We have always supported and fostered the entrepreneurial spirit," she said.

Ha, author of the report, said statistics and percentages presented in the study are obtained from a number of public records, government documents, the Internet and other banking and financial industry-related studies.

Nonetheless, Siegel said Citibank has launched a number of lending initiatives that are designed to promote minority entrepreneurship. For example, in February 2005, Citibank, Henry Schein Inc., and the National Dental Association (NDA) formed an alliance to help African-American dentists establish and maintain practices in under-served urban communities across the country. "We have committed $10 million to this project," Siegel said.

Finally, Citigroup was also awarded the 2005 Corporate Leadership Award by the National Urban League in November 2005, in part for its $1 million donation to help launch the Urban League Katrina Fund.

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By Glenn Townes, Special to the AmNews