Stacy Mitchell, senior researcher for the New Rules Project’s Community Banking Initiative, explains that the big banks constrict credit for small businesses while community banks do disproportionately more small businesses lending, and what to do to allow them to get the economy moving again.
- Why is it that
community banks do so much more small business lending than their big competitors? One reason is that big banks rely on computer models to determine whether to make a loan. Because the local market conditions and the circumstances surrounding each borrower and his or her enterprise are so incredibly varied, this standardized approach does not work very well when it comes to understanding the nuances of risk associated with a particular small business.
By drawing on qualitative information – getting to know the borrower, learning about the business, and understanding the local market – small banks can better assess risk and successfully make loans to a wider group of small businesses.
How much community banks lend to small businesses? See the charts below:
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Hello!
I’m one of those recipients of what a Credit Union can do for a person. I went to my local credit union in GA, where I already have had a Roth IRA for years, and asked if I could get a credit card with them for a lower rate than the ones I currently have. They could not give me one, on account of my unsecured debt; but what they had in store for me was a whole lot more than I expected in return.
One woman asked; “Are you satisfied with your bank?” You know, I never even thought about it. I told her that I didn’t even think I could ask that question, or even if it mattered. As it turns out, I ended up opening a checking and a savings with them, plus transferred over my car loan with at lower rate than I had earlier, and quickly set myself up on bill pay with them. Both savings and checking are earning me more interest. On top of that, they issued me a percentage of cash (that I believe came from the loan transfer) to which I paid off most of a credit card debt that I had, in answer to my first inquiry.
In October I lost my job. I immediately set out to find ways I could save money anywhere I could. My car payments were still due with the Credit Union, and when I asked them what they might do for me, they told me not to worry for three months–no payment was due at that time. When I resumed payments after that, they okay’d car payments that were nearly half of what I was paying before–and they said I could continue this for entire length of the loan.
So, I am so grateful for them–I really didn’t think a financial institution would come close to caring what happens to the individual; I’m so glad it does exist!
–JL
Small business
Small Business owners are largely forgotten. Thats why I only focus on them. I have experience several members of my family file bankruptcy due to small business failures. I also I suffered through 2 destroyed businesses due to failure however, in my failings I have learned some of the secrets to success. (Who can say they know it all?)
What I like about small business owners is that they are not afraid to take huge risks and lay it all on the line. But, I agree they do need a lot of help with their marketing. I think having them go the social media and email route is not only the least expensive but its also the most effective. Thanks for the stats!
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Great blog, i was thinking about you the other day. I used google translator
Its really nice, showing maturity in your response. Are there any forums that you recommend I join ?
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Great idea this, i dont know what to say except that I have enjoyed reading. Thanks
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thanks !! very helpful post!
Keep posting stuff like this i really like it
Small business
1) Often we forget the little guy, the SMB, in our discussions of the comings and goings of the Internet marketing industry. Sure there are times like this when a report surfaces talking about their issues and concerns but, for the most part, we like to talk about big brands and how they do the Internet marketing thing well or not so well……..
http://www.onlineuniversalwork.com
Small business
4) Small Business owners are largely forgotten. Thats why I only focus on them. I have experience several members of my family file bankruptcy due to small business failures. I also I suffered through 2 destroyed businesses due to failure however, in my failings I have learned some of the secrets to success. (Who can say they know it all?)
What I like about small business owners is that they are not afraid to take huge risks and lay it all on the line. But, I agree they do need a lot of help with their marketing. I think having them go the social media and email route is not only the least expensive but its also the most effective. Thanks for the stats!
http://www.onlineuniversalwork.com
Just wondering if any active traders are starting to trade the ETFs? After reading the book by Larry Connors – High Probability ETF Trading – I switched and I would say overall my results have improved but there are fewer trading opportunities because of the small number of ETFs he writes about. ETFs seem to be a little less erratic in their price movement so that’s good but some of them have poor results using the systems he describes in the book.
[...] New Rules Project’s Community Banking Initiative, previously showed us how community banks do disproportionately more small business lending. Now she’s saying that the bigger the bank, the bigger the fees: As our charts show, the [...]
[...] the New Rules Project’s Community Banking Initiative, previously showed us how community banks do disproportionately more small business lending. Now she’s saying that the bigger the bank, the bigger the fees: As our charts show, the biggest [...]
You may have not intended to do so, but I think you have managed to express the state of mind that a lot of people are in. The sense of wanting to help, but not knowing how or where, is something a lot of us are going through.
[...] not only will you be rewarded with fewer fees and the knowledge that you’re helping your community, moving your money might also get you a free dinner. Not a bad deal. var a2a_config = a2a_config [...]