Tag Archive for 'community bank'

Small Business Advocate Poll: What type of bank do you do business with?

The Question: What type of bank do you do business with?

38% - A large or national bank, with branches in more than one state

36% - A local community bank

15% - A local credit union

1% - I need to find a good bank

My Commentary:

Whether you know it or not, your bank should be your business’ best friend. We wanted to know about the banking relationships of our audience, so last week we asked this question: “What type of bank do you do business with?” The responses were a little surprising.

A little more than one-in-ten said they needed a good bank. Of course, this could mean either they don’t’ have a bank but need one - preferably a good one, or it could mean they have a bad bank and want a better one. Either way, this week’s poll should shed more light on this issue. Be sure to check it out below.

Almost the same number of our sample - 38% - said they did business with “a large or national bank,” as those who said they banked with “a local community bank,” coming in at 36%. This was a little surprising, since after the financial meltdown of 2008, large banks took a pretty major hit with small businesses.

The other option we gave our respondents was “a local credit union.” It was a little surprising that 15% said they did their banking with this sector. Credit unions are definitely working hard to become relevant to entrepreneurs.

On The Small Business Advocate Show, I talked more about how small businesses feel about their current banking relationships. Click here to listen or download.

Take this week’s poll HERE!

Check out other great SBA content HERE!

How does a small business fund growth?

Large, publicly traded businesses have a vast array of options when they want to capitalize growth. Small businesses? Not so much.

In fact, there are only three primary sources of growth capital for a small business:

1. Equity capital from the founder(s) and/or outside investor(s).
2. A combination of operating cash flow and profits left in the business, aka, retained earnings.
3. Borrowed funds, typically from a financial institution.

Because borrowed money is the significant small business source of capital, we asked our radio, Internet and Newsletter audiences the following question: “In terms of using a loan to capitalize business growth, which of these four options are you more likely to choose?”

Those who said they would use a national or large regional bank represented 13% of our respondents. Independent community banks came in at 31%, followed by credit unions, at 22%. And those who chose the last option: “We don’t need no shtinking bank loan!” were 34% of our sample.

It’s not surprising that over half of our respondents would prefer a local capital source like an independent community bank or credit union. For over a decade, I’ve been telling small business owners that the most consistent banking relationships, through thick and thin, are with locally-owned institutions that practice relationship banking. The financial crisis of 2008-9 turned my advice into a prophecy.

That crisis shined a bright light on at least one unfortunate truth: Banks that are beholden to Wall Street analysts and the computer-generated credit score are fair-weather friends to small businesses. It’s likely that the same poll taken pre-2008 would have produced more than 13% support for these banks.

Those who chose the emphatic “no shtinking loan” option, representing the largest single group, track with the prevailing small business sentiment in other polls I’ve reported on lately. Many small businesses are just not yet ready to use financial leverage to fund growth.

This group is either among that two-thirds of small businesses that polls show are not experiencing growth, or are among the other third that are growing but have learned how to do so more organically, which is another way of saying, “We don’t need no shtinking loan.”

A small business should have at least one banking relationship with an independent bank or credit union.

I talked more about how small businesses are funding their growth in the new normal today on The Small Business Advocate Show. I also talked with my good friend and Brain Trust member, Gary Moore, founder of The Financial Seminary and author of several excellent books on investing, about the advantages of having a relationship with an independent community bank. Take a few minutes to listen and give us your recommendations of large banks or smaller community banks. with Jim Blasingame

How small business owners are funding growth with Jim Blasingame

In praise of the independent community bank with Gary Moore

Working capital loans & independent community banks

Results of the The Small Business Advocate Poll from March 14:

The Question: As you grow your business over the next year, it’s likely that you’ll need a working capital loan to augment operating cash flows. If so, which of these options are you more likely to choose?

13% - National or large regional bank

31% - Independent community bank

22% - Credit Union

34% - “We don’t need no shtinking bank loan!”

Jim’s comment: For over a decade, I’ve been telling small business owners that their most reliable banking relationships, through thick and thin, would be one with a locally owned bank or credit union that practiced relationship banking. It’s good to see that of those who would currently consider using financial leverage, 80% would choose an option where relationships are valued more than a computer generated credit score.

Recently on The Small Business Advocate Show, Jim discussed the importance of having a relationship with an independent community bank with Gary Moore, founder of The Financial Seminary and author of several books, including Faithful Finances 101 and Spiritual Investments. It’ll only take 8 minutes to listen to what Gary has to say, he’s a pretty smart guy, and tell us your banking experiences - good and bad.

In praise of the independent community bank with Gary Moore




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