Many community banks have remained unfazed and unaffected by the mortgage collapse and still manage to lend money to their clients. However, they are not spared from the routine scrutiny and are striving to improve their portfolios. They try to steer clear of loans from the same businesses. For example, a bank with a lot of outstanding loans to coffee shops will not approve a loan request from the same business despite how strong the application, as it is trying to decrease their exposure to specific areas of town or certain shopping malls.
Getting A Loan In Community Banks
If one bank denies your loan request, you can ask help from the loan officers about what other local establishments are making loans that include your niche or industry. You can also try looking into the bank locator for independent banks in your town. The bank locator is found on the Independent Banks of America website. Executives and senior heads of community banks agree that they typically approve loans to borrowers who are mostly residents. It is because they want to establish an intimate relationship with their clients and be able to do a background check conveniently and easily before giving them a credit line.
Community banks are happy to divulge that they don’t have very stringent written contracts and standards as compared to regional or national banks. They are also willing to help their clients understand as simply as possible why, say, you’ve had a loss for the past year. They would do the necessary steps to find the reason for this loss and then move forward and try to repair that loss.
Here’s a final piece of advice from community bankers: when it’s your first time to visit your local bank, please don’t go there to ask for a loan right away! Allow your bankers to know you and build a relationship with you. Talk to them about you and your business and maybe get a feel of what the bank sees you. Find out the common businesses that the bank usually favors. You can get these details from the loan officer himself. It’s much better knowing straight from him if, say, your loan request might be too large for the bank, or if your business is one of the few new niches you’ll be introducing to them.
Getting A Loan From Credit Unions
Perhaps you gave up on getting a credit line from your bank. Think about getting it from a credit union. When the banks hit their rock bottom, credit unions were popping here and there, silently accumulating millions of dollars from clients’ savings and interests from their car and home loans. A lot of have transitioned into lending – but that’s if you can find their location.
“The world’s best-kept secret.” That is what Mike Hales, Director of the National Association of Credit Union Service Organizations, describes credit unions. That isn’t a compliment, though. He says that there are almost 8,000 listed credit unions and 2,000 of those are lending business credit lines to their clients. Plus, they are encouraging them to become official members. The Boeing Employees Credit Union is willing to help residents from Washington. You may also want to check out the National Credit Union Association website to find other credit unions as well.
Credit union heads agree that their typical small-business lending capabilities are undoubtedly increasing throughout the United States. And in the past few years, there have been approximately 30 cooperatives that have been formed to manage the business loans of several hundred credit unions.
If you are unable to get approved at a community bank or a credit union, there are still hundreds of companies that provide short-term loans. However, be cautious, as many of the agents offering financial loans are former mortgage brokers, and we don’t have to elaborate on that.
Also, business to business lending – which is what it’s going to be called once you decide to go into business with these financing companies – is unregulated and usury laws and guidelines don’t apply to these loans. This means that the loans can have very high-interest rates. Some have reportedly reached as high as 80%.
So before making a final decision, do ask questions. Besides, it’s free to inquire about anything and everything related to your planned loan. Ask around, too from friends and competitors. It’ll do more good than harm!