Memo To Wells Fargo, re $100 Billion

By Charles H. Green

The news everywhere has been abuzz since May 1 about the bold, and might I add welcome, announcement that Wells Fargo has set an ambitious goal of funding $100 billion of small business loans over the next five years. Applause! Seriously, that’s big news when WFone of the nation’s largest banks sets out to intentionally be the game-changer in financing the smallest companies, which are so vital to job creation.

Not being one to shy away from giving unsolicited advice, I thought I would offer a couple of suggestions to my friends at WF, just to keep in mind as they set out on this noble journey:

The ‘Do’s:’

1. Do focus a proportionate amount of attention on the companies with annual revenues less than $300,000, which is about 89% of the 28 million businesses in America. Everybody’s gunning for the larger deals, but how about setting aside some of your capital for the little guys?

2. Do buy one of those online innovative lenders, so you can scale loans a broader list of these smaller enterprises profitably with your cheaper capital, and pass out some cheaper funding to these companies who are currently charged too much.

The ‘Don’ts:’

1. Don’t let this ambition be empty PR rhetoric by counting up loans you would have made anyway, like those less than $100,000 on your call report that may or may not actually be made to a ‘small’ business.

2. Don’t forget SBA loans, and while there, ramp down to include thousands more of those loans less than $150,000. There’s not service fee, so you’ll already be 52 bps ahead in revenues!

Good luck – your public pledge is quite admirable and the leadership to the industry by your example might just get the attention of some capable peer banks, particularly when they see how it impacts your bottom line.

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