North Fork Bancorp., whose nearly 20 downstate branches converted in March to the Capital One brand, closed out its history by becoming one of the 10 most focused lenders to small businesses, a recent federal report shows.
North Fork was acquired in 2006 by Capital One Financial Corp., itself the second largest provider of small-business loans in the nation. The McLean, Va.-based company trailed only New York City-based American Express Corp. in small-business lending among the 100 largest lenders in the U.S.
The Small Business Administration defines a small-business loan as any loan under $1 million, and a micro loan as $35,000 or less, although for an annual study it conducts it uses a $100,000 measure for the latter category. Credit card purchases are included in the data.
Micro loans are considered risky because of the limited business experience of many entrepreneurs who seek them, but are also regarded as a promising alternative for individuals to extricate themselves from dead-end jobs or public welfare. The Self-Employment Learning Project found that 49 percent of micro-loan recipients were still in business after five years, a slightly higher percentage than the average for all small businesses.
In a study of microfinance in upstate New York between 2000 and 2004, the Federal Reserve Bank of New York found that about half of loan recipients received funding to support existing businesses, including retail, professional services and personal services like child care.
On average, loan recipients paid an average interest rate of 8 percent over a term of at least four years, and many were allowed to place vehicles, tools or other equipment as collateral.
In its annual ranking of small-business lending, SBA assesses banks and credit-card issuers by the percentage of loans that are made to small business, against total commercial loans and assets. The North Fork operations inherited by Capital One placed eighth nationally, and were tops in New York ahead of M&T Bank owner Manufacturers and Traders Trust Co., with the Buffalo-based company which ranked 15th nationally. M&T Bank has about 50 branches in the lower Hudson River Valley, with double the deposits of Capital One.
JPMorgan Chase & Co., the largest bank in the local area with 20 percent of all deposits, ranked 28th nationally in small-business loans and fourth in New York behind Citigroup Inc.
Citigroup ranked third nationally in small micro loans after American Express and Capital One, with JPMorgan Chase fifth and M&T seventh. North Fork fared exceptionally well by that measure as well, however, appearing in the top 25.
Among smaller banks in New York, Poughkeepsie-based Riverside Bank landed among the statewide leaders for small-business and micro loans.
Micro lending was very much in the headlines this month, following the opening of the first Grameen branch in the U.S., in Queens. Grameen founder Muhammad Yunus won the Nobel Peace Prize two years ago for pioneering the concept of micro loans to aid development and entrepreneurship in his native Bangladesh.
Today, organizations like San Francisco-based Kiva operate Web sites allowing individuals to lend small amounts of money to entrepreneurs in developing nations and follow their progress.
Closer to home in Purchase, MasterCard Inc.”™s foundation recently awarded $600,000 to six organizations that provide microfinance training.
