Robb Hilson’s job as head of small-business banking at Bank of America is to convince small-business owners that the bank wants to do business with them.
That’s not easy when small businesses have consistently said in surveys that they find it hard to get loans from banks, and when banks have become more cautious about lending to small companies following the recession. But in the 18 months Hilson has been on the job at the nation’s second-largest bank it has had some success with its 3.2 million small-business customers. Last year, Bank of America made $8.7 billion in new loans to small businesses, up 28 percent from 2011.
“I feel really good about the momentum. There’s obviously more work to do, but we’ve made a lot of progress,” Hilson says.
Hilson, 54, took the job as small-business executive in November 2011 soon after Bank of America started placing 1,000 bankers in cities and communities around the country to serve small companies. Bank of America and other big banks began bolstering their small-business outreach after they were criticized by company owners and lawmakers for stringent lending standards that prevented many companies from getting loans.
“It’s a bigger challenge because we’re building a business,” Hilson says. “It’s a different conversation with small-business owners. So many of these folks are wearing a bunch of hats. It’s just a different environment than meeting with the CEO.”
Hilson’s role puts him in a position to hear about, and gain understanding, of the problems small-business owners face. He recently spoke with the Associated Press about his work and small businesses. Here are excerpts, edited for brevity and clarity:
Q: How do you size up the state of small business today?
A: This most recent downturn by almost any account, if not all accounts, was the steepest, the most dramatic, severe, however you want to characterize it, since the Great Depression. I think it’s also fair to say that small businesses relative to other businesses were particularly hard hit. The economy isn’t perfect, but it continues to slowly but surely get better. We saw small-business owners doing a great job of rightsizing their businesses when sales dropped off so dramatically in 2008 and 2009, and they’ve come back. Surveys have told us that despite all the challenges and the recession that they endured, very few of them have second thoughts about getting into business for themselves.
Q: What will it take for small-business owners to be more confident?
A: You probably see a little more confidence today than what you saw in November or even last May. I think there were things leading up to the election and all that (that contributed to some pessimism).
I think they’re dealing with this new reality of sluggish growth, very low interest rates and not taking as much risk as they were in 2005. What is it going to take to go back to 2005? I don’t know if we’re going to see that, maybe ever.
I think we’ll see more optimism than what we’ve seen today. In our survey, we did a subset around the millennials (people age 18-34). The numbers were off the chart versus any other age groups we looked at. They were very optimistic, more likely to hire, more optimistic about where the economy is going and prospects for the near term.
Q. Suppose a business owner doesn’t qualify for a loan at Bank of America? What do you do?
A. We would give them a pretty good sense of what it would need for them to look like for them to qualify. But we also work with some nonprofit organizations in the community that might be able to work with them. Community development financial institutions — these are by and large nonprofit financial institutions, and we’ve been one of the biggest supporters of these. They’re smaller organizations that aren’t subject to the same regulations as Federal Deposit Insurance Corp. banks. If we’re not able to help a client today from a credit standpoint, our goal would be to give them a pretty good sense of, what were the gaps, and what they would need to work on to make the answer a positive one the next time around.
Q: What results are you seeing from the 1,000 bankers you’ve placed around the country?
A: We have a lot of nice charts with impressive trend lines. Let’s talk business lending. I think it’s safe to say that small-business owners, their health continues to improve, so balance sheets and cash flows are getting stronger, interest rates are at an all-time low. So it’s a good environment to borrow in. We’re excited that we were up 28 percent in new loan originations in 2012 over 2011. And through the first four months of this year, we’re ahead of that pace.
Q: But small-business owners are known for plowing every penny they can into their companies. How do you convince them that their personal finances should be more of a priority?
A: They may just be focused on their business, but we will lead a conversation that will provoke them to think about, are they addressing their kids’ college education? Or are they doing some things that would benefit their employees? Are they doing some things that would help them prepare for retirement?
Q: If you were to own a small business, what would it be?
A: I would love to own a little record store. And vinyl is coming back! Vinyl isn’t dead and in fact, it’s thriving and I would love to do it. But what is more likely to happen at some point is I am going to get into a business with one or both of my children.
Q: If you did open this record store, what vinyl would you stock it with?
A: You’d have to start with Sinatra and you’d have to capture some of the current genres. But the cool thing about vinyl is, not only are current bands coming out with that format, you’ve got this huge catalog of artists who have been around a long time, where they’re reissuing these pressings that sound better than ever.