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Boston, February 4, 2008.

The Massachusetts Community & Banking Council (MCBC), a coalition of community organizations and financial institutions, has issued its ninth consecutive  report on small business lending patterns in the Greater Boston area. The report, Patterns of Small Business Lending in Greater Boston, 1998-2006, focuses on lending to small businesses located in Boston, the Boston Metropolitan Statistical Area (MSA), the counties that comprise the Massachusetts portion of the MSA and the 146 other cities and towns that comprise the Boston MSA. The report was prepared for MCBC by Stuart Ryan of BankMaps LLC.

“This report continues to show troubling disparities in small business lending in lower income and minority areas,” said Esther Schlorholtz, senior vice president of Boston Private Bank & Trust Company and co-chair of MCBC’s Economic Development Committee. “If access to financing is limited, then businesses are likely to have a harder time surviving in the very communities where the need is greatest for jobs and economic development.”

Among the report's most important findings are the following:

Comparison with Other Metropolitan Areas

• Of the fifteen largest MSAs across the country, the Boston MSA – for the second straight year – ranked last in lending rates to small firms (firms with annual revenues less than $1 million) in 2006 and last in lending rates to all firms.
  
  
• * The Boston MSA also ranked last in 2006 in terms of the overall lending in low-to-moderate income neighborhoods and lending to small firms in low-to-moderate income neighborhoods.
  

1998-2006 Lending Rates in Boston

• The lowest rates of lending to small firms (measured in thousands of dollars per 100 small firms) in the city of Boston in 2006 were in low income census tracts while the highest rates of lending were in upper income census tracts.
  
  
• In each of past nine years, low-to-moderate income minority neighborhoods in the city of Boston have reported lower rates of lending than low-to-moderate income white neighborhoods.
  
  
• In eight of past nine years, the lowest rates of lending to small firms in the city of Boston were in low income census tracts while the highest rates were generally in either middle or upper income census tracts..
  
  
• In seven of the past nine years, the city of Boston has had a lower overall lending rate than the entire Boston MSA.
  

2006 Lenders

• The combined small business loan volume of Massachusetts banks increased by 7.8 percent in the Boston MSA in 2006 to $2.541 billion.

• The top five Massachusetts banks alone accounted for 45.1 percent of all small business loan dollars in the Boston MSA in 2006, down from 50.2 percent in 2005.
  
  
• Credit card lenders provided 72.8 percent of the number of small business loans in the Boston MSA in 2006 and 20.4 percent of small business loans dollars.
  

Lending volume in 2006 was significantly impacted by a reporting change involving American Express Bank, FSB, which did not report small business loan data in previous years.  The bank reported 78,933 small business loans for $308 million in the Boston MSA in 2006.  The reporting change accounted for 89.9 percent of the overall increase in the number of reported small business loans in the Boston MSA in 2006 and 42.5 percent of the increase in small business loan dollars.

About the Massachusetts Community & Banking Council

The Massachusetts Community & Banking Council (MCBC) was established in 1990 to bring together community organizations and financial institutions to affect positive change in the availability of credit and financial services across Massachusetts by encouraging community investment in low-and moderate-income and minority group neighborhoods and providing research, other information, assistance and direction in understanding and addressing the credit and financial needs of low- and moderate-income individuals and neighborhoods.

MCBC is funded through the financial support of member banks. MCBC’s 2007 bank members include: Avidia Bank, Avon Co-operative Bank, Bank of America, Bank of Canton, Benjamin Franklin Bank, Boston Private Bank & Trust Company, Braintree Cooperative Bank, Cape Ann Savings Bank, Central Bank, Chelsea-Provident Co-Operative Bank, Citi, Citizens Bank of Massachusetts, Dedham Institution for Savings, Eagle Bank, East Cambridge Savings Bank, Eastern Bank, Everett Co-Operative Bank, Fiduciary Trust company, Hyde Park Co-operative Bank, Hyde Park Savings Bank, Mt. Washington Bank, North Cambridge Co-operative Bank, Reading Co-operative Bank, Sovereign Bank, State Street Corporation, StonehamBank – A Co-operative Bank, TD Banknorth, The Bank of New York Mellon Corporation and Wainwright Bank.

In 2006, MCBC, in collaboration with the Commonwealth of Massachusetts, the Massachusetts Bankers Association and the Massachusetts Small Business Assistance Advisory Council, developed Banking Partners, a new small business loan program which brings together banks and non-profit technical assistance providers that offer counseling and training to improve access to financing by very small businesses. To date, 25 Massachusetts banks have joined Banking Partners.

Patterns of Small Business Lending in Greater Boston, 1998-2006 and information about Banking Partners are available on MCBC’s website at www.masscommunityandbanking.org.

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