Nearly 60% Of Small Business Owners Favor Local Community-Focused Lenders

Many small-business owners are putting their trust in neighborhood banks rather than big national lenders, according to new research by Academy Bank. The study of 222 U.S. small-business owners found that 58.9% got their most recent business loan from a community or regional bank, compared with 31.5% who secured it from a national bank and only 9.5% who used an online-only lender. 

For many small business owners, the choice of lender is about the kind of relationship they’ll get. In the survey, the top three factors small-business owners said mattered most when choosing a bank were ease of the application process at 56.9%, competitive interest rates at 54.1% and personalized service and financial guidance at 52.7%.

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The results show that business owners want a banking partner more than they want a faceless institution. They want someone who understands their market, speaks their language and can move quickly when they need capital.

And though digital banking tools are becoming more common, small business owners still value working with institutions that are embedded in their local economies and working directly with a dedicated banker in person. The study found nearly 75% have a preference for at least some human interaction when they’re applying for a loan, rather than digital-only services.

Why You May Want to Work With A Community-Focused Lender

If you own a small business and are thinking about borrowing, here are a few reasons to consider community-focused lenders.

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• Community-focused may be more in tune with you. Compared to big banks like Chase or Bank of America, community banks are deeply rooted in the areas they serve, which means they generally have a better sense of local market conditions and the unique challenges small businesses face. 
• Smoother application process. Due to their smaller size, local and community-focused lenders generally have fewer steps in the underwriting process. This means they can often approve and close on loans faster than national retail banks.
• More personalized service. Having a dedicated banker who actually knows your business can take a lot of stress off your plate. When something comes up, you’re not stuck on hold or explaining your situation from scratch every time. 

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