The Community Bank Advantage

By Steven Sefton, President, Regents Bank

Whether you’re looking to finance your next project, obtain a line of credit or expand your business, you may find yourself in search of a good banking partner. So where should you turn? Big banks seem alluring for their deep pockets and numerous offices, but community banks are attractive for the personalized attention they offer and their community focus.

It might surprise you to learn that if you operate a small to midsize business, you may have a better chance of obtaining a loan or a line of credit from a community bank. Here’s why:

• Mission. In order to meet their profit goals, big banks prefer big loans. Small loans may be more hassle than they’re worth for a big bank. Conversely, community banks thrive on small to midsize loans.
• Relationships. Big banks have central loan processing facilities and receive large volumes of loan applications. Loan approval at big banks is a very quantitative process. A community bank will combine quantitative and qualitative evaluation – that is, the community banker will rely partly on personal knowledge of the loan applicant and the applicant’s company to decide whether to originate the loan.
• Context. Just as it sounds, a community bank is very focused on its community. Your banker is likely to be involved with and knowledgeable about the region in which you operate. Again, this will allow the banker to consider more than just the numbers when evaluating your loan application. Additionally, when you establish a relationship with a community banker, you’re likely to benefit from the community bank’s consultative banking services. Community bankers welcome the chance to serve as an advisor to their clients for important business decisions and general business strategy. Big banks often view consultative services as a legal liability.

If you’re looking for a large loan to finance a large real estate development project, you probably want to start with the big banks. But if you’re looking for a smaller loan, a business line of credit or an SBA loan, you might save time and gain an important business ally by starting with a community bank.