The knowledge gap between banks and small business owners isn't as wide as it used to be, but Wells Fargo's Doug Case says there's still room for improvement.
"Small business owners don't consistently feel confident about credit. There's a lack of understanding around how credit decisions are made by financial institutions," says Case, a senior vice president and small business segment manager for Wells Fargo (WFC).
Wells Fargo just launched a new online Business Credit Center that provides small business owners a digital resource to learn about credit — including topics such as how to produce a strong credit application and how to calculate the amount of financing a business needs.
The center is part of the larger Business Insight Resource Center, which includes videos, podcasts, and articles for small business owners. The Business Insight Resource Center was recently redesigned to optimize it for mobile use and to allow business owners to customize content based on the amount of years they have been in business and their specific business needs.
"What we saw when examining the [resource center] was that half of the articles and podcast views were around the topic of credit. It suggested to us that we needed to provide more content around this topic," Case says. The technology to support the new portal is managed internally by Wells Fargo and the content is managed by Imagination, a Chicago-based custom publisher.
The subject matter is split into several general areas. One is content that teaches small business owners about how credit in that sector works, and how it differs from consumer credit. "We attempt to answer questions such as, 'How do you make a decision on issues such as when to get a business credit card or a business credit line?'" Case says.
Other information includes content on how to manage business credit, such as determining how much credit is actually necessary, and how to manage cash flow. A third category is how to actually apply for business credit; the various forms necessary and the channels available to apply for loans and other credit products.
Wells Fargo has a large small business banking division, and is the country's highest-producing lender of Community Reinvestment Act loans. According to CRA data, the bank in 2011 extended more than $26 billion in loans of less than $1 million and $16 billion in loans of less than $100,000 to small businesses. It also approved $1.24 billion in SBA 7(a) loans — or Small Business Administration Loans aimed at owners who normally would not be able to get credit from a conventional bank — between October of 2011 and September of 2012.
The bank considers the portal, which is free and aimed at businesses with up to $20 million in annual sales, to be a value-add more than a marketing campaign, though there are links to Wells Fargo's small business banking services.
"It's a fine line with this type of innovation. We want to present Wells Fargo as a [small business lender], but it's not a sales site," Case says. Wells Fargo isn't the only player making an active push to increase its small business share. Small businesses have traditionally lagged in the availability of financial services technology. That gap has been closing through the development of new services for payments, payroll and a concerted effort by banks to offer innovation such as digital signatures, as well as use venues such as social media to connect to small businesses.
For example, Wave Accounting, the Toronto-based company which sells a hosted business accounting and payroll software system, is planning to push into the U.S. Small businesses sign up for the company's Wave Payroll engine.
For a fee of about $5 per employee per month, the accounting engine pays staff via check or direct deposit, manages federal, state and local payroll taxes, and manages vacation time. Combined with the accounting engine, the payroll product can also be used to track expenses, send invoices, generate reports and collaborate with other staff.