Small Banks for Small Businesses
When your small business needs a loan to survive or thrive the first place you look should be a small bank. We already discussed the Small Business Lending Fund, which will distribute $30 billion among community banks for small business loans. If you are still eager to try a Main Street bank also consider that the number of small business loans approved by big banks has dropped significantly in recent years.
In 2010 the 25 banks with the most deposits collectively approved a little over 20% of the small business loans in the U.S. This number has dropped almost a third since 2006. Why do big banks often stay clear of small business loans? Most importantly it is hard for these huge institutions to make a profit from relatively small loans.
There are exceptions. One big bank that is very small business friendly is SunTrust. In 2008 SunTrust loaned around $34 million to small banks, by 2010 the amount loaned to small businesses climbed to $155 million.
When your business is desperate for a loan you don’t want to waste time and energy with banks unwilling to give you the money. Before you deal with a huge national bank, why not try out you local bank? You will likely find them more enthusiastic to give you the financing you need.