Why Work With A Local Bank For Commercial Loans?

Author: Woodsboro Bank

Categories: Blog

Businesses seeking commercial loans can choose from numerous lending institutions, from major national lenders to local banks. While larger lenders may have better brand recognition and a broader reach, many companies find that working with a local bank is the best option.

A study by The Harris Poll shows that most consumers prefer to deal with local or regional banking providers rather than large national institutions. Some of the reasons behind this preference cited by respondents were the opportunity for a more personalized experience and better customer service.

A report by the Federal Reserve reached a similar conclusion, with community banks enjoying a 73 percent net satisfaction score among small businesses, versus 58 percent for large banks.

Here is a closer look at why your business should consider working with a local bank for commercial loans.

Better Rates and Lower Fees

commercial loan lenderOne of the biggest benefits of working with a local bank is the ability to take advantage of better rates and lower fees. In many cases, big banks offer loans that work out to be more expensive for businesses because their operations and marketing costs are so high. If you are trying to grow a small or medium business, lower fees and better rates allow you to reinvest more money back into your business.

Although there may be exceptions in some individual cases, local banks generally have lower fees and better overall rates than their national counterparts. Moreover, they tend to be more willing to negotiate with local customers.

Less Stringent Lending Standards

Many big banks have set strict lending guidelines with no room for flexibility in approving commercial loan applications. Loan officers at all of their branches throughout the nation must follow these lending guidelines to the letter. Businesses with less than perfect or not well-established credit and annual revenues falling just a little short may not qualify.

With a local bank, however, loan officers often have the discretion to consider each organization’s overall situation and base credit decisions on a business’s unique needs and circumstances. They understand the local community, factors that influence area companies, and are more willing to work with businesses on an individual basis to find out more about how they operate and better determine whether to extend them a loan.

Moreover, because local banks serve smaller regions and do not have to think on a national scale, they can customize their lending products to better suit their business customers’s needs.

More Personalized Service

Local banks stake their reputation on offering good customer service. This means that loan officers often take the time to get to know business owners personally. Most business owners will work with the same banking representatives each time they visit their branch, allowing them to build important personal relationships that facilitate banking processes.

The owners and managers of local banks typically live in the same community as the businesses they serve. This means that it is usually easy to arrange a meeting with bank management, something that is highly unlikely with a big national bank. Local banks do not see their customers as just a number in the way that some bigger institutions may. By forming a connection with customers and understanding their situations, local banks are able to offer solutions that benefit their clients and their company’s needs instead of having a narrow focus on improving their bottom line.

Supporting the Local Community

Another important aspect of working with a local bank is that these lenders support the community in which the business operates. Many local banks nurture their community by donating money and time to causes that are important to locals, allowing their areas to thrive. At a time when people feel more disconnected than ever as a result of technology and the pandemic, the personal touch afforded by local banks can make all the difference.

Quicker Lending Decisions

commercial loanLarger banks tend to have a lot of red tape when it comes to loan processing. In many cases, their headquarters might be across the country from the location of the business seeking a loan. Working with a local bank means that decisions regarding a company’s finances are made locally. As a result, decisions are likely to be quicker and more streamlined, which can result in faster approvals so your business can begin moving forward with its plans.

Reach Out to the Community Commercial Bankers at Woodsboro Bank

The community commercial bankers at Woodsboro Bank in Maryland have been serving our community since 1899. We can help area businesses find the right lending option to reach their goals. Contact our team today to discuss your objectives and get started on a customized lending solution.