Small Businesses: Love me, love me not, love me…
It’s a confusing time for small businesses – no doubt about it.
On the one hand, small business owners are being heralded as the cornerstone of the American economic recovery, yet business might be slower than you’d like and money is still tight. On the other hand, if you are looking into borrowing opportunities, you might not feel you’re getting a very warm welcome from banks. You might even get the feeling your business is no longer welcome because you’re too small to serve.
The Small Business Loan Fund, a $30 billion federal program to support community banks’ small business lending, is a step in the right direction. A significant number of financial institutions plan to apply. The Small Business Administration, one of the few government agencies that seems to be running on at least six of eight cylinders, has also been trying to support lending to small businesses.
What may come as a surprise to small business owners is that in almost every market, there is at least one bank fighting for the opportunity to provide services, products and loans to businesses that might be considered too small to serve by the largest national and regional banks. This isn’t a criticism of bigger banks. It’s just the reality of working a business model. For instance, the other day, I needed a certain kind of grout for some kitchen tiles I was installing. The big box store didn’t have it, but a local tile store did, because it specialized in tile!
A real positive for small businesses is that they don’t have to settle for less by working with a bank that doesn’t advertise on national TV. Many well-capitalized, well-managed community banks offer the leading-edge conveniences and capabilities business customers want – lockboxing, Internet banking, cash management services, and remote deposit capture. They value relationships, and frequently are willing to negotiate pricing for loyal customers. One of the services we at Empowered Banking provide is the consulting and analysis to help banks provide these important capabilities as efficiently and cost-effectively as possible, enabling banks to reduce their costs and offer the best pricing to customers.
A lot of banks got badly burned in the real estate lending exuberance, and hundreds have been shut down. Many of the survivors, however, are emerging from the chaos in pretty good financial shape. They’re dying to build new customer relationships and, yes, lend money.
Imagine that.
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