Using a Local Bank for Small Business: Pros and Cons

As a small business owner, you’re faced with several decisions every day. You know that each one counts – especially when it comes to finances. One of the most important decisions you’ll make for your small business is the financial institution you trust it with.

When searching for a bank, it’s important to assess what your specific business banking needs are and the kind of service that’s important to you and your small business. While large national banks can offer widespread access and a long list of services, using a local bank for small business can provide an unmatched level of personal service and connection to the community that can be a game-changer for the success of small businesses.

Below we explore the advantages and potential drawbacks of using a local bank for small business.

Pros of Local Banking for Small Businesses

• Personalized Service: At a local bank, you’re more than just a number; you’re a valued part of the community and are taken care of by people who live and work in the same place you do. Local banks often know your name when you walk through the door or call in, have a deep understanding of the local economy, and provide a completely tailored customer service experience.
• Fast Response Time: Because things are done in-house, local banks are more agile and can get you what you need quicker than a big bank. You’re more likely to have direct access to decision-makers, which can speed up loan approvals or resolve issues faster.
• Flexible Lending Decisions: Big banks have strict lending limits that they don’t often look beyond or budge on. Conversely, local banks are in tune with the community and work to understand your unique circumstances to make informed decisions. They’re more willing to work with small businesses, especially if you have a trusted reputation locally.
• Centrado en la comunidad: Local banks want to help small businesses grow. They recognize their value and support small businesses around them. Some even have a dedicated SBA Department whose sole focus is helping small businesses flourish. Local banks also provide sponsorships, networking opportunities, and education within the community. Many of their employees serve in these organizations to give back as well.
• Stable: Local banks are deeply rooted in the communities they serve and are less likely to close locations or leave the area.
• Relationship Banking: Local banks work on a relationship banking model with bankers who are committed to building a genuine and lasting relationship with customers. They get to know your goals, your financial history, and what truly matters to you.

Cons of Local Banking for Small Businesses

• Fewer physical locations: Because they’re dedicated to serving the community, local banks concentrate their physical locations across certain areas. Having a smaller geographic footprint allows local banks to focus their resources on fewer, strategically placed locations. Still, local banks can offer the conveniences of a larger regional or national bank, like online and mobile banking, ATM access, Treasury Services, and personalized support, so physical locations are less important.

Choosing between a local bank and a national bank depends on what you and your business value. You want a bank that understands and reflects your ideals as a small business. If you value personalized service, local knowledge, community reinvestment, and responsive expertise, a local bank is the perfect financial partner for you.

Experience the local bank difference for yourself.

Visit our experts at any banking center or have our experts come to you!