Many small businesses are struggling to make ends meet. After all, sales are slumping, cash flow is diminishing, and banks are tightening their loan standards, especially now that the federal stimulus money for SBA-backed loans has been exhausted.
However, as the public pressure mounts for banks to increase loans to businesses, some institutions are taking the message to heart. From JPMorgan Chase to Goldman Sachs, banks are finding creative ways to jumpstart lending to small businesses. A new “Loan for Hire” program not only pledges loans to small businesses, but gives you discounts on your interest rate for hiring American workers.
Using Credit to Hire Employees
JP Morgan Chase, which is America’s second largest bank, recently launched a “Loan for Hire” incentive program, which is marketed to reduce our nation’s high unemployment rate by helping small businesses hire new workers.
Through the new program, any small business that opens a new line of credit up to $250,000 can receive a .5% discount on their interest rate for every new employee they hire. The limit is three employees, which means companies could potentially drop their credit line interest by a total of 1.5%.
This offer also stands for businesses with existing lines of credit. However, these businesses must increase their credit line by at least $10,000 to be eligible for the hiring incentive.
In addition, Chase has also stated that they will extend another .5% credit line interest drop for customers who open a new business checking account.
Adding up all the incentives, it’s a potential total of 2% you could save on a line of credit interest rate.
The Bottom Line
The Chase Loan for Hire program is certainly an interesting way to reduce the expense of your company’s debt. While the .5% – 2% reduction in interest rates will not cover the cost of a new employee, it can reduce your annual interest expense by thousands – which would be better reinvested in the growth of your company. If you are considering hiring additional employees, as well as utilizing a revolving line of credit, then the new Chase program could help improve your bottom line.
Other financial institutions, including Goldman Sachs, Huntington Bancshares, and Bank of America, have also pledged to improve lending conditions to small businesses. Hopefully, the tide is indeed turning in small business lending.
