Chase has apparently decided to do its part to jumpstart the still sluggish American economy by promoting an interesting offer: The bank promises to reduce the interest rate for each new employee that a small business hires.
Last week Chase announced that the new program is being offered to business owners willing to undertake a new Chase business credit line of up to $250,000, and to existing customers who seek to increase their line of credit by at least $10,000. The bank promises to reduce a half of a percentage point off the interest rate for each new individual hired (with 3 being the limit). The bank stated that the discount will be valid for the duration of the loan.
Businesses that are Chase checking customers will be eligible for an additional 0.5% point credit-line discount, in addition to the hiring discount. Theoretically, this would mean that small business could reduce their credit-line interest rates by 2 percentage points. Chase calculated that the step would save $4,000 over three years on an outstanding balance of $65,000.
But here’s the rub – only enterprises that qualify for a credit line will be eligible for Chase’s offer, so many companies won’t be able to apply. During the recession many of the leading banks slashed small business lending and Chase was no exception. Nevertheless, Chase claims that during the first quarter of 2010 it loaned $2.1 billion to small businesses, representing a 31% increase in comparison to the corresponding quarter last year.
Despite some signs of recovery, payroll processing firm ADP announced that last month companies employing less than 50 workers laid off an additional 1,000 positions collectively. So it would appear that U.S. businesses are being very cautious – they are choosing not to hire additional personnel despite tax and other incentives.
Is Chase just chasing after some good PR and a little bit of the limelight in these troubled times? It’s a definite possibility.