The latest job figures, released today, are another reminder of the importance on hiring for our economy.
And the engines of that job growth are small businesses. That’s a useful background for a new program being announced by JPMorgan Chase (C).
In a report on CNNMoney.com, Chase has created a new incentive for small businesses to hire.
The new program, unveiled Wednesday, is open to business owners who take on a new Chase business credit line of up to $250,000 or existing customers who increase their line of credit by at least $10,000. For each new hire, up to a maximum of three, the bank will knock half a percentage point off the line’s interest rate. The discount will stay in place for the life of the loan.
Businesses that are also Chase checking customers get an additional 0.5 percentage point credit-line discount, on top of the hiring discounts. By maximizing the discounts, a small business could in theory knock its credit-line interest rates down by 2 percentage points. Chase estimates that would save $4,000 over three years on an outstanding balance of $65,000.
Rates vary widely based on customer circumstance, but a typical interest rate for a Chase business loan would run around 6%, according to a Chase spokesman. Businesses with annual revenues of $10 million or less are eligible for the hiring discount.
The incentive takes aim at a big economic-recovery hurdle: an unemployment rate flirting with double digits. Main Street businesses, in particular, have been slow to add workers.
Companies with fewer than 50 workers collectively shed another 1,000 jobs in June, according to estimates released this week by payroll processing firm ADP. Over the past two years, small companies have hemorrhaged nearly 3 million jobs.
But Chase’s offer will only be useful to companies that manage to qualify for a credit line — something that’s been extremely challenging for the past two years. Like many big banks, Chase drastically cut back on its small business lending as the economy worsened.
The company no longer breaks out its small business loan numbers (it was briefly required to do so by the Treasury Department), but it says they’re on the rebound. Chase says it loaned $2.1 billion to small businesses in the first quarter of this year, marking a 31% increase from the same quarter a year ago.
