Small Biz Turns To Small Banks
Small-business loans bring more than $100 billion in profits for banks, according to a recent report by the financial services group of McKinsey & Co. In addition, small-business owners are two-and-a-half times more profitable than the average retail consumer.
But so far, big banks haven’t capitalized on the potential of small businesses.
As banks have gotten larger and harder to navigate through seemingly endless mergers and mass restructurings, the little guys — with their relatively small loans — get lost in the shuffle.
Tired of being overlooked, many business owners are turning to smaller, local banks.
The McKinsey study estimates that large banks have lost 2 percentage points of market share to small banks over the past three years.
Community banks — generally, those with assets of $1 billion or less — have been spared much of the subprime fallout.
“Community banks tend to be much more conservative … [which] has kept them out of trouble,” says Lynn Davis, president of Community Bank Consulting Services in St. Louis.
Typically, says Davis, community banks have been very small-business friendly. The current big bank troubles seem likely to exacerbate that trend.
Photo by MSDesigns.
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