Small Local Bank: what are its needs and benefits in 2021

How To Find a Small Local Bank for Your Business

When I really needed a sofa for my small business, I was stunned without it. The government asked a participating bank or credit union to apply for a loan under the wage protection program. I used a Fidelity Investments corporate account, but Fidelity is not a bank.

Other small business owners who had accounts with major banks didn’t fare much better either. They were able to apply, but their requests were ignored. The big banks poured their money into the larger, more established companies until the program funds ran out and the smaller companies were excluded. Bloomberg reported that small businesses had a 6% success rate with Chase, while nearly all large companies got what they wanted.

Although big banks made it to the second round for small businesses after Congress gave more money to the program, many small business owners are still angry with big banks for the way they have been treated. They want to transfer their accounts to a small local bank. I also learned my lesson and decided to open my corporate bank account at a small local bank. But where?

Small local banks are by definition small and local. A small local bank in one area is unavailable or unsuitable for a business in another area. You can search for “bank” on Google Maps, but besides filtering well-known brands (Bank of America, Chase, Wells Fargo, Citi, …), how do you know which ones are small and small?

FDIC Reports on the Deposit Market Share

The FDIC provides deposit market share reports, which show the deposits each bank has in a specific area.

You can go to “State-> Country-> City-> Zip Code” and stop at any level, or you can run the report for a Metropolitan Statistical Area (MSA), which includes multiple cities in an area. I am using San Jose, CA as an example here.

The report shows a list of the banks in the area and their total deposits inside and outside the area. It is easier to work with data by highlighting, copying, and pasting the entire table into a spreadsheet. You can add a new column and add deposits inside and outside the area. Then sort the rows in this “Total Deposits” column from smallest to largest and delete the second half. This is your list of small banks nearby.

Then you can add another column and calculate the percentage of total deposits in the area for each bank. Sorts the rows according to this “% local” column from highest to lowest. Banks with more deposits in the area are more local.

Independent Community Bankers of America (ICBA)

Independent Community Bankers of America (ICBA) is an association of community banks. They provide a community bank locator where their members appear in their area. It can serve as another source.

A map shows where the branches are located, which can be a factor if you need deposits and withdrawals. Since they only list their members, not all small local banks make it onto their list. For example, neither the Pinnacle Bank nor the Heritage Bank of Commerce from the FDIC report appeared on the map when I searched for San Jose, California.

credit unions

What about credit unions? Credit unions are usually local, and even a large credit union isn’t that big compared to a national bank. However, not all credit unions offer corporate accounts. Credit unions are generally more focused on consumers and personal accounts. To find credit unions in your area that also offer small business loans and corporate accounts, locate the SBA district office in your area and search for credit unions in the list of SBA lenders in the resource guide for your local district.

The business checking account requires a minimum balance of $ 2,000 to waive the monthly maintenance fee and pays no interest. I think that’s fine. The bank has only one branch in our city. The next branch is in another city, 30 miles away. Since I don’t deposit or withdraw money, I agree. When I visited the branch to sign the documents, I saw that the bank branch has no ATMs, only offices and counters. All activities take place seated. I loved the old-fashioned “know your name” vibe.

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