Why Community Banks Matter to Small Businesses

An editorial by Al Liestman, Senior Vice President-Lending.

Small business and entrepreneurs are the foundation of America. According to a recent report by CNBC, small businesses employ 70 percent or more of U.S. workers and they are historically the leading creator of new jobs. As major contributors to their local economies, it is crucial that small business owners receive the financial support they deserve.

Community banks are small businesses, too. Much like the mantra of these small organizations, they strive to improve the communities they serve. Small businesses should view these institutions as trusted financial intermediaries that exist to aid them in achieving their own goals. Community banks thrive by helping small businesses grow, and that collective growth stimulates local economies.

Additionally, community banks understand the unique challenges small businesses face.  They offer personalized service to deliver viable solutions to help these establishments succeed. By providing access to capital, community banks help small businesses keep local economies thriving, and in that way community banks are an essential part of our nation’s financial system. In fact, an FDIC study described community banks as being “inextricably connected to entrepreneurship.” In 2011, they provided 46% of the banking industry’s small business loans despite controlling only 14% of the nation’s capital assets.

According to the Independent Community Bankers of America, community banks have their own advantages over big banks. Community banks focus attention on the needs of local families, businesses and farmers, channeling most of their loans to the neighborhoods where their customers live and work. Community banks also are willing to consider character, family history and discretionary spending when making loans, while big banks mainly focus on credit scoring without regard to individual circumstances, making it harder in some cases for small businesses to be approved for a loan. 

Reinvesting in the future of the community is a main priority for small businesses and community banks. This shared interest creates a mutually beneficial relationship that is advantageous to the communities in which they serve. For more information on the benefits and to get started with a community banker, visit www.grsb.com.

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