Banking locally

Guest post by Richard Gray

At the start of the year, I talked about steady growth as an answer to a stable economy after the Great Recession. One of the ways we can contribute to steady growth is by investing in local businesses. When you’re considering a lender relationship to help you expand, here are some reasons to consider banking locally, just as you would consider investing in other local businesses.

You will support your local community. Local banks hold deposits from local citizens, then loan that money back out to consumers and small businesses in the area, helping spur job growth and revitalize communities. Locally-owned means profits stay in the community and are spent in the local economy.

Community banks also donate significant amounts to various local non-profit and community organizations and give back to local communities through volunteerism and monetary donations. They provide important financial education to the underserved. Like other types of local institutions, when the people working at financial institutions have their ear to the local ground, resources will go where those local communities need it most.

Local banks are accountable. They have to be. Often they’re dealing with their friends, neighbors and others they know in the community. This promotes responsible stewardship of the community’s wealth.

Local banks know local industry. Your banker can tell you what he or she has seen firsthand in the economy and relate it to local businesses like yours. Your local lender can tell you what has and has not worked for the hundreds of small businesses they’ve worked with over the years. You’ll get expertise from employees who are from the community, know the community and have been working at the bank long enough to know how to best meet the needs of the community. They know the market and have a vested interest in seeing the local economy succeed—after all, they live and work there, too.

You’ll find personalized financial services.  At financial institutions that are smaller, with ties to community, there are fewer layers to get to the top, which means you have easier access to executives. Community banks have fewer clients per employee and less turnover. You may even get a real human being to answer your phone call. All of this results in improved customer service.  Small businesses can especially benefit from this service by working with their community banker to create a package of products and services that exactly fits their needs at a cost that makes sense.

While some may feel wary that bankers are simply trying to make a sale, business owners should recognize that bankers are highly knowledgeable, but untapped, resources that are qualified to talk about small business matters. It is in their best interest to protect your assets and help your business thrive. If your business is healthy, theirs is, too.

Specifically, some of the information and free services your banker can provide you include:

• Financial counseling on how best to finance a business need or growth.

• Helping you structure your accounts to gain more than the $250,000 FDIC insurance.

• Introducing you to products like CDARS, which guarantees up to $50 million in FDIC insurance with little maintenance on your part.

• Informing you of investment vehicles to maximize your return.

• Advising on insurance products to protect your assets.

• Providing an overview of remote deposit products—including online products—that allow you to deposit checks from your workplace, increasing efficiency and saving you time and money.

• Someone just to bounce ideas off of—your community banker is local and is a generalist who sees and works with a number of different types of businesses and may have ideas to help you or know of resources you could use.

While most consumers use their bank only for deposits and loans, others recognize their bank’s experience and utilize it as a business partner. Do you?

Faster decisions. When loans are submitted for approval at community banks, they go through a local committee rather than being sent off to a faraway board for approval. Decisions are based more on the borrower’s total situation than simply a credit score. Local decision-making means faster turnaround by people who know your name.

Greater satisfaction. Banks with assets under $1 billion (most community banks) provide 46 percent of the industry’s small loans to farms and businesses, although they hold only 14 percent of industry assets. Despite the angst against banks that was especially rampant as reported by media during the Great Recession, there is one segment of the population that was still satisfied with their banks: small businesses, from a J.D. Power and Associates study that measured small business customer satisfaction with the overall banking experience by examining eight factors: product offerings; account manager; facility; account information; problem resolution; credit services; fees; and account activities. Another study cites that small business owners are twice as satisfied with their primary bank if it is a community bank versus a large bank (39% compared to only 15%).

Local lenders are the stewards of the financial resources of the communities they serve. Bankers have the unique opportunity of helping people realize their dreams by using the collective wealth of the community to finance those dreams, whether they are a new automobile, a home, starting a new business or expanding an existing one. Local banks can help fund your dreams as you help support the local economy.

Richard Gray is senior vice president of commercial lending and SBA lending at Bank of American Fork, Utah’s community bank leader, an Equal Housing Lender and Member FDIC. Richard also manages the bank’s Murray branch, and he has assisted local small businesses in obtaining SBA funding for more than 25 years. He serves on the board of directors for nonprofit Kostopolus Dream Foundation and was the chairman for nonprofit Utah Microenterprise Loan Fund, Salt Lake City.

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