6 Reasons Entrepreneurs Benefit From Seeking a Small Business Loan Locally
You have many choices when it’s time to finance your small business investment. There are credit unions, mega banks and even online institutions that may be willing to extend financing for a small business loan. The best choice you can make is to go with your local community bank to get your new endeavor started.
Community banks are invested in seeing small businesses grow in the area. That’s why they are your best partners, but there are additional reasons, gleaned from a study of seven Federal Reserve banks, why you should seek out your community bank first for small business loans:
It’s what they do. Community banks make up only 20 percent of the banking industry, but did you know that they account for more than half of all small business loans? Locally-owned banks know that they play an important role in promoting small businesses and that their mutual success is good for the community.
You’re more likely to get the financing you need. Community banks are more likely to see an opportunity where a bigger bank sees risk. Approximately 76 percent of small business loans processed through community banks are approved, while bigger banks approved only 58 percent of similar loans.
You’ll enjoy the experience. Community banks get high scores for satisfaction. Small businesses that went through a community bank reported that they were satisfied with their overall experience at a rate of 75 percent. Those that went through credit unions and bigger banks had lower satisfaction rates, at 56 and 51 percent, respectively.
Convenience isn’t everything. You may be tempted to complete a quick online application to get fast approval, but the survey results suggest that you won’t be tempted to do it a second time. While approval rates were the second-highest for online lenders at 71 percent, the satisfaction score was much lower than the other financing options, at only 15 percent.
Read the fine print. It may be that there’s a communication gap with some of the bigger lenders that you won’t experience with a community bank. For instance, the dissatisfaction that stemmed from using an online lender was related to high interest rates 70 percent of the time.
You’re looking for more in your experience. Your community bank is going to be interested in you as a business owner, and they have some personal stake in your success because they are tied into the prosperity of your community, too. Don’t make the mistake of choosing a quick online application over a richer, better-informed process.
At CBA of Kansas, we support community banks because they are important to the growth of local businesses. Your local community bank is the only lender that shares your vision for a prosperous community built on the success of small businesses. If you haven’t already accessed our resources to share the great partnership between your community bank and the community you serve during Community Bank Week April 24 -29, don’t forget to do it today!