NEWS: Smaller Banks Look to Small Businesses


Are you an entrepreneur looking to take out a first loan for your small business? If so, a smaller bank might be the right choice for you. Small business financing has seen an enthusiastic upsurge in recent years, especially in the banking sector, but it remains as difficult as ever for budding entrepreneurs to obtain a small business loan. Many put this down to an excess of paperwork and stringent rules regarding credit rating and history, but just as important to consider are the banks themselves. Most banks would rather avoid the smaller fish and profit solely from the larger fish; as such, they have measures in place to discourage any borrower that isn’t worth their time. Unfortunately, it often takes borrowers a while to figure this out, which makes reading up on your options a critical step in the process of procuring a small business loan.

It may come as a surprise to some, but smaller banks now account for a bigger percentage than ever before when it comes to the number of small business loans made and the amount of money provided. The bigger banks still top most of the lending lists, but it has become clear from recent studies that the smaller banks are actively hoovering up the huge amount of owners turned away through increasingly innovative means. But, why the sudden interest from smaller banks in competing with the financial giants of today? Well, the main reason for this is the financial incentive it offers. They can make a good premium by selling the loans on the secondary market. Some even sell their loans to the bigger banks, turning them into little more than a glorified middle man – but one making a healthy profit.

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