Bank Of America (NYSE: BAC) Corp Giving $10 Million in Grants To Help Small Businesses

Very few would argue that small businesses drive our economy, and yet many of them are struggling as they are unable to get the funds they need to operate. A move by Bank of America could help small businesses throughout the country. Bank of America plans to announce that their company will be giving $10 million in grants to numerous non-profit lenders like Community Development Financial Institutions, with the intent that the money will be loaned to small and rural businesses’. Community Development Financial Institutions, due to the economic downfall, have had little funds to help make loans to these businesses. They generally rely on money from federal agencies, which has dried up.

Bank of America is anticipating that the grant could potentially help fund at least $100 million or more in loans to small and rural businesses. This potentially could have a very significant, positive impact to small businesses throughout the country.

“Even the smallest grant enables a CDFI to leverage as much as ten times that amount to lend to small businesses, which helps initiate a ripple effect,” Mr. Darnell said in a statement reviewed by Dow Jones Newswires.

Federal Reserve Chairman, Ben Bernanke earlier this month called for help to small businesses. He voiced concern that big corporations have not done enough to help and it appears that Bank of America is answering his call.

Not surprisingly other companies are also saying that they plan to help out as well. Wells Fargo Executive Vice President Marc Bernstein said that they are also providing funds and have put into place a new initiative that is called the “second look” program. The program takes a second look at business applicants who have been turned down for loans, in hopes of finding a means to credibly approve the business for the loan.

JP Chase Morgan & Company is also claiming to do their part. They have rolled out a new program that offers their business partners perks like reduced rates. For example, they reduce rates when the business hires new employees.

Chase and Bank of America also have initiatives in place to help small businesses and each have a similar “second look” program like Wells Fargo.

While there has been a huge initiative to increase lending to small businesses, one major difficulty is finding credit worthy companies. Lenders feel that they still need to be cautious.