Shiv Krishnan’s INDUS Corp. has worked with two community banks to secure crucial financing and small-business expertise as it looked to expand over the years.
“I went to five regional and national banks, to people that I’d known over the years, who all in their advertisements say they’re friendly to small business. But when I wanted that one small loan, they were not able to come through,” Krishnan told Independent Banker.
Eventually Khrishnan received funding from George Mason Bank—a relationship that evolved into a $10 million loan portfolio over 10 years.
Years later, the small-business owner would reach out to John Marshall Bank during the financial crisis of 2008 and 2009, when larger institutions were imposing exclusionary standards. The bank’s pledge for additional support, if needed, even helped the IT company secure government contracts.
“Banking is all about whether the bankers understand your business and are ready and standing by to help you in times of need,” Khrishnan said.
Glenview State Bank asked customers: "Why do you feel community banking is important?" Here is a sampling of the nearly 100 comments posted by customers and the bank’s Facebook community in response, this year:
We are lucky. Not many towns have their own, home-based bank anymore. Most banking options these days are with gigantic corporate banks. They can't possibly care about or even know Glenview the way our local bank does. Banking with GSB is my way of strengthening our local economy - and adding to Glenview's strength as a community.
GSB is friendly, professional, helpful.
Easy access to personal bankers. Full range of services.
We have banked at Glenview State Bank since we first moved to Glenview in 1973. I secured both home and small business loans through GSB over the years and have experienced a flawless relationship. The notable advantages to GSB are the stability of the officers and staff over time and the apparent excellent effort to be technologically up to date making my banking easier and more secure than ever. It's like banking with the "big boys" without their disadvantages.
By shopping and banking locally, customers reap benefits they might not experience when frequenting big, national chains. Meaning: more of the money spent at local businesses go back into the local economy. Just how much more money?
From local farms to antique dealers to technology startups, shopping locally reveals the people behind the products and services and creates community connections.
ICBA’s Go Local Wednesday tradition continues today on social media. Show your support for community banks and small businesses by shopping and banking locally and sharing your experiences on Twitter using the #GoLocal hashtag. To follow the ICBA Community Banking Month conversation on social media, follow the #BankLocally hashtag on Twitter.
Community banks’ preferred small business lender status is well documented, but as it turns out community banks may play an even bigger role in serving the financial needs of America’s economic engines than previously thought.
According to a forthcoming study from the FDIC, its 2016 Small Business Lending Survey undercounted community bank small-business lending by at least $38 billion in the fourth quarter of 2015.
This updated accounting provides a more accurate picture of the extent of small-business lending by community banks, while also examining how these banks use local market knowledge and their relationship-based lending model in their loan decisions.
Community banks not only rely less on standardized small-business loan products (9 percent) than their larger counterparts (65 percent), but they also serve small businesses at their earliest stages (roughly 80 percent lend to startups), according to the survey. These customers often fall outside of large metropolitan areas (85 percent of community banks lend outside of dense populated regions), which makes community banks’ impact on their local economies even more significant.
These stats seem to support what small businesses should look for in a banking relationship:
- knowledge of market conditions;
- decision-lending authority; and
- familiarity with federally subsidized small business loans.
And yes, small business customers also want a more personal—and sometimes even an advisory or mentoring—relationship with their bankers.
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