Business Law News Headlines

Small Banks Profit From Relationship Lending

Market valuations of smaller publicly-held banks are higher than they would otherwise be due to their investment in relationship lending, according to a study issued today by the Office of Advocacy of the U.S. Small Business Administration. The study examined the link between market valuation and small business lending for 817 publicly-held banking organizations during the period 1994 through 2005.

“This study shows that for smaller banks it is worth the time and effort to invest in relationship lending,” said Dr. Chad Moutray, Chief Economist for the Office of Advocacy. “The market values the added profit that comes from personally knowing small business customers, and being able to offer them loans and services not obtainable from other banking organizations.”

Many times small firms have little or no collateral and younger firms do not have a credit history on which to base banking decisions. These firms may be excluded from “transactional” financing decisions that require credit scoring and other analysis of hard data used to evaluate the credit worthiness of the business and its owner. Read more at sba.gov.

Contact our Florida Business Lawyers and obtain a free case review!

	Did You Know?
	The federal securities laws are regulated In the chaotic securities markets of the 1920s, companies often sold stocks and bonds on the basis of glittering promises of fantastic profits - without disclosing any meaningful information to investors. These conditions contributed to the disastrous Stock Market Crash of 1929. In response, the U.S. Congress enacted the federal securities laws and created the Securities and Exchange Commission (SEC) to administer them.