Are Community Banks the Better Fit for Small Business ?

Community banks are gaining popularity as consumers are becoming more frustrated with large national banks and the economy. Loss of faith in the idea that bigger financial institutions provide greater security is providing community banks with a new chance for growth. Many small businesses are able to benefit from the opportunities provided by community banks.

There are over 6,000 community banks with 50,000 different locations, and over 2 million small businesses choose to work with these institutions. Community banks often prefer to would with local businesses that benefit the community, and they are attempting to make changes that address the concerns that small businesses have concerning internet and mobile banking services.

Lending

Small community banks do not have the same lending processes as larger national banks. Standard computer models determine the lending practices of large banking institutions; individual circumstances are not taken into account. Community banks are able to provide focused attention to borrowers. This allows borrowers to present carefully laid out business plans and make a case for their businesses personally.

Some community banks are certified lenders of the Small Business Administration or SBA. These banks are accustomed to working with the SBA and are participate in the Certified Lender (CLP) / Preferred Lender (PLP) programs. Always look for certified or preferred lenders if you are interested in SBA financing. The SBA office or Small Business Development Center (SBDC) will probably be able to provide you with valuable information and help you fill out different loan applications.

Once you determine the banks that best suit your needs, you need to determine exactly what you need to bring when you meet with potential lenders. The SBA Loan Application checklist will provide you with all of the essential details that you need before addressing a loan.

Meet with different lenders to find the right fit for your small business. Do not rush this process. Ask questions and get to know the people you will be dealing with. Discover if you will be working with an adviser This is typically one advantage of working with smaller community banks.

Planning

Part of convincing a community bank to finance your small business is proving that you understand what you are talking about. Begin by grasping the market. Target your customer base and potential competitors to create your plan. This may affect the type of structure that you set up.

Before you speak to a lender, determine if you want to run a sole proprietorship, LLC, etc. You should also have a location chosen as well as methods for handling legal issues. Think about how to handle finances and whether or not you will need to hire employees. All of this information needs to appear on a detailed business plan that you show lenders.

Do not expect any bank, national or community, to solely finance your venture. If you are not willing to invest in your company why should anyone else? You will need to come up with essential seed money to begin you own business. This will help you decide the type of financing that your small business needs.

Roughly 78 percent of small business owners have positive banking experiences. Banks, particularly community banks, can be a great source of support for small business owners. They offer advice on succession planning, foreign exchange rates, cash management, records management, trade advice, payment facilitation and transaction accounts.

The final step to take before applying for a loan is creating a detailed business plan. Business plans need to include a description of your company, financials, objectives, products, services, market trends, operating costs, employees, cash flow predictions, sales predictions, essential financing and structure. This is the best chance that you have to differentiate your business from others and confirm that you understand what you are doing.

Do not be afraid to ask for help with your business plan. Lawyers, business advisor and accountants are useful sources of information that can make all the difference between a mediocre business plan and a successful one. If your business credit is not established and your personal credit is less than perfect, presenting a strong business plan to a community bank will improve you chances of getting financing for your small business.

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