A popular slogan for small business owners is “buy local.” Without local support, it is almost impossible for start-up businesses to survive. It is the same with local community banks.
Community banks are similar to credit unions. These banks are dependent upon a niche market. They are most appealing to individuals that are interested in banking locally.
There are differences between big banks and small local banks. As more people are learning bigger isn’t necessarily better nor does it equate to extra opportunities. Sometimes a more personalized experience is what your business needs.
Weighing the pros and cons is always a great idea before entering into any business relationship. Keep reading for seven benefits of choosing local banks if you own a small business.
1. Banking Locally is Giving Back to the Community
Look at your local banks as a small business just like the business you own. When you support small banks you are supporting your community. The more support these institutions receive the stronger they become.
Investing in local entities creates a domino effect. It allows them to create better opportunities and increase the products and services they are able to provide.
As more small businesses invest in community banks, those banks, in turn, become stronger and greater assets. Individuals are more likely to give them a chance if they see the places they do business with placing their trust in these banks.
2. Local Banks Provide a Personalized Experience
Everyone remembers the famous line in the theme song from the popular 80s sitcom, Cheers. “Sometimes you want to go where everybody knows your name.” That’s the feeling when dealing with small local banks.
There is a relaxed atmosphere while giving the same level of service as the big banks. You do not have the robotic feeling of everyone reading from the same generic script.
Instead, you have individuals who are your neighbors. You can go into the bank and the head of the bank understands the current climate for your business. From there he or she can customize your services to fit your needs.
With big banks, clients are offered cookie-cutter options that are less flexible. This can lead to a business owner taking on services and products they do not need.
3. They are More Likely to Reinvest into the Community
Local banks are able to grow their portfolios through the accounts they service. This means they will have the ability to invest in the communities. Whether it is sponsoring a local little league team or financing a construction project.
They can remain small but make big contributions.
Another way that community banks serve small businesses is via CDC/504 Loans. These community development grants offered through the Small Business Administration. They are specifically designed for community development and offer long-term financing options.
When impoverished communities have access to financing it boosts improvement plans and creates jobs. Bringing municipalities, banks, and small business together, accomplishes the goal of community economic development.
4. Small Banks are More Flexible
In 2018 the Economic Growth, Regulatory Relief, and Consumer Protection Act was signed into law. The changes to the existing Dodd-Frank Act will allow community banks more flexibility in serving their clients.
When banks have reduced pressure and more options to serve their clients it is a win-win situation.
Local banks have the authority to review loan applications with more objectivity. Loans that would otherwise be declined by big banks get a second look. Small business owners stand a better chance of approval because the loan officer can figure in different variables.
The local economy is better because the small business person has a chance to succeed.
5. Community Banks Create Jobs
Of course, financial institutions employ individuals from within the areas they serve.
They also provide employment opportunities for residents that get hired by the small business owner who was able to secure a loan through their local community banks.
A domino effect is now in place because the companies that provide supplies to the small business need extra employees. Transportation, delivery, and telecommunications businesses all receive an uptick based on the number of successful businesses in the area.
As the cycle comes full circle the bank can now open additional branches and grow its number of employees.
6. They have the same Technology as Big Banks
A big misconception about small banks is that they cannot compete with the big-name financial institutions. This is not true. When it comes to technology and security consumer information is protected.
Your local banks offer online banking, branch ATM’s and access to ATM’s around the world. A lot of banks also offer mobile apps and payment services online.
Most important, your deposits in local community banks are safe and insured by the Federal Deposit Insurance Corporation (FDIC). As with larger banks, your account is covered up to $250,000 based on banking regulations.
It is always a good practice to explore the banks you are preparing to do business with. Understand your accounts and what will happen in case of an emergency.
7. Get Better Rates and Lower Fees
There is no guarantee but there is a chance that your local bank will offer better rates than bigger banks. This includes loans and credit cards. You could also see lower fees on banking transactions like ATMs.
Local banks want your business and to get it they have to offer incentives you won’t bet at the larger institutions.
Small business owners need as much financial relief as they can get. Saving on annual percentage rates or the amount you pay at out-of-network ATMs can add up over time. This is savings you can reinvest into your business.
Are You Ready to Bank Local?
Banking locally has its benefits. For small business owners, it can make for a lasting relationship that not only shows mutual support but also helps strengthen the community.
Having a bank that you know has your back is reassuring. If you’re in Georgia and want to learn more about local banks, click here to view our business brochure.