Huntington Bancshares Inc. is ramping up its small-business lending by committing to lend up to $1 billion to Ohio companies over the next three years in partnership with the state.
Stephen Steinour, Huntington's chief executive officer, said the plan will give his Columbus company access to new, relatively low-risk customers: local companies with $400 million or less of annual revenue that are looking to borrow money to make acquisitions or launch products, among other things.
"It gives us a deal flow — we don't [usually] see all these deals," Steinour said.
Working in conjunction with the state will also lower Huntington's risks, since the company will not be shouldering all the responsibility for the loans, he said.
Companies that borrow through state programs tend to be a safer bet, Steinour said, because they are usually supported by local economic development efforts that give them a leg up over their competition. It is "lower-risk overall lending."
The $54 billion-asset Huntington has long been a player in small-business lending. Last quarter it extended more than $50 million of such loans in partnership with the Small Business Administration. Steinour said his company approached the state of Ohio with the idea this year.
Huntington will lend alongside Ohio's low-cost loan programs, like the "166 Direct Loan" initiative, which supports things like equipment purchases and building expansions, Steinour said.
Currently, that particular initiative has limited appeal to Huntington, because lending is capped at $350,000, Steinour said. The new program will let Huntington extend another $400,000 to $500,000 to 166 borrowers at a matching interest rate — in this case, the cost of funds plus 200 basis points.
Gov. Ted Strickland of Ohio said in a press release that the program would be a boost to the local economy.
"The partnership will retain and grow Ohio jobs," he said.