Community banks can have a tremendous effect on the success of the small businesses around them. For decades, community banks have been the backbone to entrepreneurship in America and are critical in the start-up phase of small businesses. Community Banks are responsible for over 40 percent of all small business loans awarded in America1. This shows that small businesses are more likely to receive the help they need from community banks than their larger counterparts. In 2018, the “big bank’s” approval percentage for small business loan was only 25 percent1. This is a stark contrast to the approval percentages of small business loans at community banks. Community Banks approved 49 percent of small business loans in 20181. That is nearly double what was approved by the “big banks”.
Let’s put it this way - a small business owner has almost double the chances of getting the loan they need from a community bank over a larger financial institution. As a result, the success of small businesses is inherently dependent on the success of community banks. The Small Business Administration (SBA) found that each year small businesses borrow somewhere in the neighborhood of $600 billion from banks, with the average loan being $663,0001.
These loans serve a multitude of purposes - from financing the growth and expansion of a company to increasing cash flow to covering overhead costs. With big bank’s small business loan approval rating being only 25 percent, combined with the fact that it can take months to get approval, they are not a viable solution for most local, small businesses1. Small businesses are looking for fast and efficient ways to get the money they need so they can grow, and community banks are their biggest ally.