There have been small business owners who have turned to smaller, community banks as a way to access funding from small business loans which they hope will help to improve the profitability and overall success of their company. Local lenders are said to be an asset for small businesses since they may be able to work on a more personal level when it concerns lending to a business in their area.
Community banks or regional banks often allow business owners to develop a more personal relationship with their lender and, in certain cases, this has allowed businesses to become more successful over the long run since a lender may be more willing to work with the business owner in terms of a small business loan and repaying the debt.
Also, some banks may be able to offer business owners counseling or guidance in their company, which will allow them to make better use of the funding provided from a financial institution. Understandably, if a small business acquires a loan from a larger financial institution, they may not get the personal counseling which could be beneficial, as community banks may have more in-depth understanding of a local business market and potential customers.
While there have been some programs, like those implemented by the SBA, which have made small business loans through these community banks, there are no guarantees when it comes to a business’s ability to borrow money for their company. Understandably, not all small businesses may be able to qualify for a small business loan, and there are some financial institutions which have kept their lending practices tight over the past months due to uncertainty in the economy and concerns over the ability of a business to repay their debts.
Yet, community banks and credit unions have been used by certain small businesses as a way to not only gain access to funding for their company, but also as a way to develop a relationship with a financial institution that could assist them in becoming more profitable and successful in their company through either counseling services or by tailoring small business repayment guidelines to a specific business’s situation, which has reduced defaults in the past.
Some business owners have opted to use local banks simply for the reason that if financial difficulties due arise they can work out repayment schedules which will not only allow the bank to recoup their money but will, in certain cases, allow the business to avoid defaulting on their debts and having to close as a result. It’s true that times have been slow for many businesses and some business owners have been hesitant to acquire debt, but access to funds through financial institutions and guidance in business practices are necessary for any businesses to thrive and, for many business owners, these assets have been best acquired through financial institutions in their community.