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UPDATE 1-JPMorgan cuts rates to small businesses that hire
June 29, 2010 / 9:01 PM / 7 years ago

UPDATE 1-JPMorgan cuts rates to small businesses that hire

* JPMorgan to cut loan rates 0.5 pct per new employee

* Bank loaned $2.1 bln to new businesses in Q1 (Adds Dimon comments on strength of recovery, regulatory environment)

By Elinor Comlay

NEW YORK, June 29 (Reuters) - JPMorgan Chase & Co (JPM.N), the second-largest U.S. bank by assets, on Tuesday began a program to cut the rates it charges small businesses for loans -- if the businesses hire new employees.

For each new employee a small business hires -- up to a maximum of three -- the bank will cut the rate on its Chase loan by 0.5 percentage point, it said in a statement. Businesses will also get a discount for opening a checking account.

A small-business owner could save about $4,000 over three years on an outstanding balance of $65,000 with the discounts, according to JPMorgan estimates.

“We know how important it is to help small businesses because they are core to the U.S. economy,” JPMorgan Chief Executive Dimon said in the statement.

JPMorgan’s average rate on a small-business loan is about 6 percent, a spokesman said. The average rate on a small-business loan across U.S. banks is about 5.5 percent, estimated Bob Coleman, author of the Coleman Report on loans backed by the Small Business Association.

Lawmakers have criticized banks for slowing the recovery by halting lending in a bid to stem losses on loans. Bank executives, including Dimon, have said in response that they are still lending but loan demand has slowed because of the recession.

Goldman Sachs Group (GS.N) in November launched a program with Warren Buffett, providing $500 million for education efforts and capital to small businesses.

JPMorgan said last year it planned to increase lending to small businesses by $4 billion to a total of $10 billion.

The New York-based bank said it loaned $2.1 billion to small businesses in the first quarter, up 31 percent from the year-earlier period.

Speaking at an event to mark the launch of the loan program at the bank’s Park Avenue headquarters, Dimon told small business owners that he is optimistic about the strength of the U.S. economic recovery and he believes fears of a double dip in the recession are overblown.

When one small business owner asked Dimon why U.S. President Barack Obama’s administration isn’t doing more to help small businesses, Dimon said that he is “beyond the point” of asking the administration for support, in an apparent reference to the financial reform bill currently before Congress. The bill will force JPMorgan to cut some of its most lucrative businesses.

“I think in some ways it’s time to let business do its own thing,” he added, noting that economic and regulatory certainty may be all U.S. businesses need to start growing. (Reporting by Elinor Comlay; Editing by Steve Orlofsky and Carol Bishopric)

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