B of A Program Courts Small-Business Owners

Bank of America has jumped into the fray to woo California’s nearly 1 million small-business owners with a package of discounted services.

This new emphasis by the state’s largest bank is the latest indication that California’s major financial institutions see a small business as a major opportunity, especially compared to the highly competitive efforts to lend to large public corporations.

A recent drop in the number of small-business accounts and an increasing awareness of the importance of small business to the state’s economy prompted B of A to create the “Small Business Alliance,” said Shelly Porges, senior vice president of retail product management.

Valued at $500 a Year

B of A’s Small Business Alliance services are offered automatically at no cost to 340,000 small-business checking account holders. These customers get a 50% discount on the bank’s Small Business Reporter publications, a 25% discount on the standard setup fees for payroll service, discounts on Hertz car rentals, subscriptions to Entrepreneur magazine and seminars around California on managing a small business.

Each small-business account holder package has a value of $400 to $500 a year, Porges said.

Companies with sales under $5 million are eligible.

Porges, in outlining the program at the bank’s headquarters Wednesday, said the new small-business services reflect Bank of America founder A. P. Giannini’s original commitment to serving small-business owners.

“Small business is big business in California,” said Porges, who called small business an “increasingly profitable segment of the California economy.” She declined to say how many small-business accounts Bank of America has lost in recent years or how many small-business loans the bank has made.

While B of A is trying to set itself apart with its new alliance program, other large California banks are going after small businesses as well.

Industry executives said the competition for small-business clients has heated up in recent months because the corporate and retail banking services market is saturated and they see little chance for significant growth in those areas.

Rival Has Division

“We have been beating each other up for years on the corporate side,” said Douglas K. Freeman, Wells Fargo’s senior vice president for the Business Banking Group. “Now, the fray has started in the small-business area.”

Freeman said Wells Fargo established its business banking division two years ago to serve the state’s dynamic small-business market. All Wells Fargo branches have a business banking officer “totally dedicated to this market,” Freeman said.

First Interstate Bank of California offers financial incentives to its loan officers and branch managers to bring in new small-business accounts, said John Popovich, director of public affairs.

“This is nothing new, really,” said Popovich. “We are very interested in the small-business market.”