Post a Question
Signup
Refer & Get Paid
Newsletter
|
Newsletter
A Community vs. a Regional or National Bank
By The BIDaWIZ Team - December 8, 2009
This is a critical decision that requires proper evaluation of your banking objectives and the state of your business.
Are you a...
|
 Startup Seeking Financing?
|
 Growing Business Looking to Expand Nationally?
|
Business Looking to Manage Investments?
|
Small Business Looking For Personalized Service?
|
Whichever state your business falls under, a 3-5 year financial projection should also be incorporated in your decision as choosing a bank should be based on your company's needs today and well into the future. It would be a shame to develop a strong relationship with a banker only to leave for a different bank 3 years later.
So what are the advantages and disadvantages of choosing a community versus a regional or national bank.
Community Banks
Direct Access to seniors bankers is by far the greatest advantage that community banks offer over regional & national banks. Small business owners with deep local roots (i.e. local restaurant) will likely only have access to senior bankers in a community bank which could be the difference maker in obtaining a loan. Despite this benefit, local banking does come with costs (i.e. limited resources). A fast growing business may in the future wan to utilize more financial products which is generally limited at a community bank. Another factor to consider is that community banks have less capital to support themselves which maybe a concern given the recent credit crunch.
Advantages
|
|
Disadvantages
|
Direct Access to Senior Bankers
|
|
Limited Personnel & Capital Resources
|
Staff Given Greater Discretion
|
|
Limited Financial Services
|
Personalized Service
|
|
No 24/7 Service
|
Deep Local Ties
|
|
|
Less Attrition
|
|
|
National Banks
Convenience is by far the greatest advantage of selecting a regional or national bank. A business with franchises across a region or the country or a growing business looking to expand their footprint would likely want to strongly consider a regional or national. Along with the convenience factor, regional & national banks also offer a variety of financial products (i.e. loan types) which may be attractive to a business looking for the most financial options. In addition, a business that uses multiple banking services (checking, savings, credit, investment, insurance) can often receive a premium on interest rate (1 to 2%) over the community banks. The major drawback of a national bank is that usually you receive less personalized service and often they will look purely at the numbers when doing an initial screening of a loan application.
Advantages
|
|
Disadvantages
|
Convenience
|
|
Less Personalized Service
|
Extensive Resources
|
|
Less Focus on Local Market
|
Scope of Services
|
|
Greater Focus on Larger Clients
|
More Business Banking Questions?
Your specific situation may not fall under the circumstances detailed above. If so, our Financial Wizards are Here to Assist.
Have Comments? Write to comments@BIDaWIZ.com
|