Small and medium-sized businesses rely on their local communities to help them succeed, as it’s these communities that supply many of their customers, workers and vendors. When these businesses partner with local banks and deposit money in community banks, it creates a symbiotic “cycle of money” that benefits everyone in the region. That’s because deposits into community banks fuel the area’s growth. That money is funneled right back into more community-based loans that help create new jobs, secure existing jobs, and support a multitude of initiatives that contribute to a thriving community.
Community Banks Are the Original Crowdfunders
In this way, deposits into a community bank are not unlike crowdfunding, a relatively new financing concept in which a project or venture is funded, in part or in whole, by money raised in small amounts from a large number of people, typically using the internet as the platform to expedite. According to Statista, North American crowdfunding platforms raised more than $17.2 billion in 2017.
The ways in which the community benefits from the deposits into a local bank vary but are undeniable. As an example, deposits from local companies make it possible for the bank to loan to another business to expand, which enables them to manufacture a line of new products. This capability, in turn, makes the company more competitive in the market and generates additional revenue. Growth necessitates hiring, hiring leads to increased spending in the community, and the cycle continues. The effects are multiplied each time the bank lends money, across the region.
Community Banks are Critical to U.S. Small Business
While small and mid-sized banks combined control less than 20% of all bank assets, they account for more than 50% of all small business lending. By comparison, the largest U.S. banks, which control almost 60% of U.S. bank assets, account for less than a quarter of small business lending.1 Community banks are very important to this country’s rural areas, too. In fact, they are the only financial service providers available to many of America’s counties.
Businesses have a number of options today when seeking the right long-term financial partner. Any business that recognizes its community as a significant factor in its long-term success and that values the positive impact of a healthy community on its future should talk with a community banker.
There are a number of ways a community bank can help your business prosper. Learn more about the benefits available to you by downloading our eBook, Top 4 Benefits of Working with a Community-Based Business Bank.