When it comes to community vs. commercial banks, I believe both have their place and provide value to their customers. However, my background at a community bank makes me a little biased when it comes to the advantages local business owners can reap when they choose a community over a commercial bank.
For those unfamiliar with the differences between the two, let me offer a quick look at the major distinctions to help you select the solution that is best for your business.
— Compare and Contrast Although I assume he was talking about visual elements, graphic designer Chip Kidd has this to say about choice: “You can be crippled by too many choices, especially if you don’t know what your goals are.”
I would argue that you can apply this to just about anything and banks are no exception. The first-choice concerns choosing whether a community or commercial bank is right for your business requires knowing your business goals. Understanding the main differences between the two options also helps.
First of all, commercial banks are big box, big names that operate on a national basis, and are subject to federal interstate banking regulations. Typically, commercial banks feature two divisions: investments and banking. Commercial banks are privately owned by shareholders and their goal is, of course, to generate profits.
Community banks are also profit-driven; however, their stakeholders are local, on-the-ground business owners and leaders. By and large, community banks are smaller than commercial banks and operate within their individual state jurisdiction, which means fewer regulations, specifically, those concerning interstate banking. That said, a community bank can extend coverage for its customers through partnerships with other institutions across the country. This allows for more flexibility with a personal touch and local feel.
Small business owners should choose a community bank for expert individual attention, the type that a large commercial bank with its scores of customers cannot afford. Simple things like face and name recognition (rather than requiring ID). Your community bank employees will get to know you, as a person and professional with specific needs and goals. They are motivated to do so because the purpose of a community bank, after all, is to support and energize local development! Knowing the businesses and business owners living and working in their neighborhood is central to this mission.
Although community banks are somewhat constrained by smaller budgets, they top commercial banks when it comes to faster loan approvals, fewer fees and penalties and less red tape, all around.
I would love to tell you more about my experience with community banking and recommend a few! My partners and I will share some solutions to help you get beyond your business challenges.
Schedule some time on my calendar and let’s connect!
