Washington, D.C.--Today, as reported in USA Today, the Service Employees International Union (SEIU) unveiled a new report exposing Bank of America's drastic decline in Small Business Administration (SBA) lending to the country's struggling small businesses despite the billions the bank received in taxpayer-funded bailouts to spark renewed lending.

As the failure rate of small businesses continues to rise, Bank of America has--and continues--to reduce the amount it lends in SBA loans while increasing higher-interest and higher-default credit card lending and a risky Express Loan program. CEO Ken Lewis has referred to the bank's small business portfolio as a "damn disaster."

"Not only is Bank of America teaming up with other big banks and the U.S. Chamber of Commerce to tank financial reform, it's turning a blind eye to our nation's struggling small businesses," said Stephen Lerner, special assistant to SEIU President Andy Stern. "Instead of boosting the economy with the billions in taxpayer bailout funds the bank received, they're forcing small businesses to close their doors and further crippling Main Streets across America."

Like Bank of America's profits, its claims of having been the nation's top SBA lender in the past were also the result of ignoring some inconvenient truths. Even though it originated the greatest number of loans under the SBA's main program for several years, the amount of money it lent was significantly lower than many of its top competitors.

Bank of America has pulled a bait and switch, shifting its small business portfolio from SBA backed loans to higher-interest, high-default credit cards. Instead of lending money to small businesses through SBA loans with typical interest rates of 7 percent to 9 percent, Bank of America appears to be moving its small business clients to higher-interest credit card loans with typical interest rates of 16 percent to 23 percent.

Furthermore, the bank appears to be favoring "Express Loans" with lower underwriting standards--despite the fact these loans are guaranteed by the SBA at a lower rate and have been found more likely to default.

Quick Facts:

* Bank of America cut SBA 7(a) loans by 90 percent--twice the national average. Over the past two years, its small business lending has decreased from more than 10,000 SBA 7(a) loans to fewer than 500. The greatest decline occurred after the bank received bailout funds last October--money intended to jumpstart lending.

* In 2007 (the most recent year for which this data is available), more than 75 percent of Bank of America's small business loans were made through FIA Card Services--its credit card division. The $6.3 billion increase in the bank's total small business lending between 2006 and 2007 came almost entirely from the bank's credit card division.

* From FY 2006 through FY 2008, more than 95 percent of Bank of America's SBA 7(a) lending was through the SBA Express program, saddling shareholders and communities with unnecessary risk.

Bank of America's SBA lending has plummeted since the bank accepted bailout funds last fall, even when compared to the nation's other top banks. This is true at both the state and federal levels. Furthermore, the bank has thus far refused to participate in the SBA program designed to help healthy businesses survive the recession.

Cuts were most severe in states such as Arkansas, where the bank made 49 SBA 7(a) loans worth $1.4 million in FY 2007, and made zero in the first seven months of FY 2009, and in three New England states (Maine, New Hampshire and Rhode Island), where the bank went from making 109 loans worth $2.8 million in FY 2007 to zero to date in FY 2009.

Read the full report.

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