Community Banks

Small, community banks often offer your best option for conventional small business finance. In fact, some commentators predict that in the current era of mega-mergers in the banking industry, a profitable cottage industry for community banks will emerge. These institutions tend to be less formulaic in assessing loan applications and are more willing to consider individual factors in their decision-making.

Smaller businesses should consider establishing an ongoing working relationship with a specific bank even before setting up shop, or as soon as possible thereafter. Establishing a small line of credit with a bank, even if your business does not immediately need funds, is often a good way of getting to know your banker. The more knowledgeable and familiar the lender is with the borrower, the more likely the lender is to understand and accommodate the individual needs of the small business. And if you apply for a line of credit and then don't need to use it, you'll build up a very favorable impression of your business.

Work Smart Advice on credit issues, as well as general business expertise, have always been offered as a service by some banks, but with the increased competition among banks many more institutions are promoting and packaging their loan offerings with these additional "smart money" services. Most small businesses can benefit from the experience of an experienced banker or lender, and your choice of a lending institution and a specific person within the institution should take this potential benefit into consideration.