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This open letter is a project of the 2012 Presidio Graduate School's Capital Markets class. To read more letters, visit the project page here.
Dear Andrew Plepler, Global Corporate Social Responsibility and Consumer Policy Executive:
We commend Bank of America’s increased commitment to lending to small businesses that are unqualified for traditional loans, as evident with the provision of more than $200 million to finance small businesses since 2010. As one of the nations leading financial institutions, the bank is positioned to address the needs of small business owners and facilitate the financial recovery of this nation. Our interest in this topic arose from our study of capital markets and sustainable practices through the MBA Program at Presidio Graduate School. Our research on small business loans has revealed the opportunity for an innovative banking program that will not only help strengthen the economy and increase your customer base, but also support your efforts in responsible business practices, community engagement, and customer retention.
We have developed an opportunity that will address the drawbacks of risk and return inherent in small business loans. Our concept is inspired by Bank of America’s successful “Keep the Change” program that helped customers save approximately $400 million in its first two years of existence. We propose a variation of this program that deposits customer’s “change” into a local small business fund. Funds in this account will earn interest and program participants will be given access to a social media platform, which connects them to the borrowers.
Social network lending has proven to reduce the risk of default, as demonstrated by the community monitoring systems in place for successful international microfinance operations. Once the effectiveness of the model is proven, the interest rates for these small business loans may decrease, as the number of small business loans continue to increase. Our program provides an opportunity for Bank of America to improve its CRA rating, enhance relationships with customers and communities, and increase revenues.
According to the Small Business Administration, small businesses are the engine of job growth and are essential to the recovery of the U.S. economy. We envision Bank of America as a key partner and are eager to meet with you to discuss the structure and financial details of our initiative.
We look forward to your response,
Flora Kaplan and Shaun Webb
