Even though the community bank presence in local communities have been declining since 1984 from 17,401 to 6,146 in 2013, their contribution to small business operations still makes and impact in the communities they serve. (The Statistical Protal, 2017.)
WHY THE DECLINE? Stricter regulations due to the housing crisis almost ten years ago, shift in demand and interest rates initiated the spiral. Many community banks have changed faces several times, “but the profitability of those remaining has recovered closer to pre-crisis levels than it has for larger banks. And, perhaps most important, community banks’ share of the market for small business loans—the lifeblood of community banking—remains robust and vastly disproportionate to their size.” (Community Banking, 2016)
WHAT MAKES THE DIFFERENCE? People! People bank with people and not buildings. Most banks have similar products and rates, but it is the teller, customer service representative and bankers who are constant fixtures even when the name changes that make the difference. Community Banking in the 21st Century 2016 National Survey “…offers insight into the close relationships that community bankers cultivate with these borrowers, to whom they lent $340 billion last year, an amount that, while slightly lower than in previous years, was nevertheless higher than the amount extended by their larger counterparts.” (Community Banking, 2016)
WHY COMMUNITY? Community Bankers are our friends and neighbors. The personal attention with face-to-face interactions allow for long-term relationships to be maintained while consistently not wavering with a .25 discount on a loan. “Unlike the large banks, community banks have usually been seen as a friend to the entrepreneur.” (Rogers, 2014, pg.180) Many of the larger banks offer an order taking style of service. Even though you can sit down with a person, lending decisions are made from a centralized loan office at head quarters which is hundreds of miles from small town USA. Depending on loan size, community lenders can decision loans at the branch and have answers within 24-48 hours. The community banker knows their customers and the customer capacity outsideof the ratios.
They work with you where you are not from an electronic application. “Close relationships between businesses and banks also are suggested by the frequency with which community bankers meet with, provide advice to or otherwise monitor small business borrowers.” (Community Banking, 2016) The frequency of the meeting may vary from quarterly to annually, but the premise is based on the needs of the customer.
I support community banks because I used to be a part of this financial sector. It brought me joy to accommodate a customer’s needs or offer an alternative solution. Community banks are a trusted friend for entrepreneurs. Start building your relationship today.
Community Banking in the 21st Century 2016 National Survey. (2016, September 28). Retrieved from Community Banking: https://www.communitybanking.org/~/media/files/communitybanking/2016/cb21cpublication_2016.pdf?la=en
Rogers, S. (2014). Entrepreneurial Finance Finance and Business Strategies for the Serious Entrepreneur. New York: McGraw Hill.
The Statistical Protal. (n.d.). Retrieved from Statistica: https://www.statista.com/statistics/318034/community-banks-number-usa/