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How small businesses benefit from partnering with local banks

Over this past year, during the COVID crisis, many bank lobbies have been shuttered, making neighborhood banking seem like a thing of the past. But for small business owners, this crisis has brought home just how important it can be to have a strong partnership with a local bank.

Marilee Falco

Thinking back to the beginning of the pandemic when communities were in lockdown, many small businesses needed to apply for Paycheck Protection Program (PPP) loans to cover payroll. Because of the complexity of the PPP loan applications, most banks worked with their existing business clients first. Early on, it was often those businesses with established relationships with local banks that received their emergency funds first.

Even in “normal times,” having a long-term working relationship with a local bank can be beneficial to a small business. Local banks have the same security and compliance requirements as larger mega-banks, but one particular benefit of smaller local or regional banks is that they have more latitude than larger banks when it comes to waiving fees or granting a more desirable interest rate.

Cynthia Joyce

If a small business owner needs something outside of the ordinary, she may not have to jump through as many hoops with a local bank. If, for example, the company needs something like a medallion signature, banks may only be willing to work with established clients they know well.

With a local bank, you are likely to receive more personalized service than you would receive with a national bank. We have noticed that there is often less turnover and employee rotation between the branches of local banks as opposed to national ones. If a business owner has a banking question, when she calls her local bank, she will speak to a person in her area and not a call center as may happen with national banks. And if there is unusual activity in a business account, a local banker will often pick up the phone and call a business owner rather than wait for the automated system to kick in.

Over time, small business owners may realize another unintended and unexpected benefit of working with a local bank. Your local banker may become a good source for business development. Because they build business for their bank through networking, and because they come to know your business well, they may very well become a good referral source for your company.

A final benefit of working with a local bank? By doing so, you are supporting your local community’s economy – and not that of a national bank with headquarters elsewhere.

Yes, there are certain advantages to working with larger, national banks. Among them, bigger banks often have more comprehensive online services, for example, which can simplify and expedite transactions for businesses.

If your small business is in the market for a local bank, the Independent Community Bank Association (ICBA) can help you compare options in your area. In addition, the FDIC’s BankFind tool provides information about all FDIC-insured banks and their locations, including current and historical data.

Of course, every business wants their banker to collaborate well with other professional advisers, such as attorneys, accountants, and strategists. It may be advisable to contact other small business owners to inquire about their experience working with local banks.

Whether you choose to bank with a local, regional or national bank, it’s always a good idea to take the time to develop and maintain a close relationship with your business’s banker.

Marilee Falco, CFP®, ChFC, is a principal and financial strategist at Agili, responsible for client financial strategy and counsel, comprehensive financial planning and investment management as well as managing the firm’s Bethlehem office. A Certified Financial PlannerTM and chartered financial consultant, she can be reached at mfalco@agilipersonalcfo.comCynthia Joyce, MBA, CPA is the Chief Operating Officer at Agili, of Bethlehem and Richmond, Va., responsible for overseeing financial, budgeting, human resources, and office operations for the firm. She can be reached at

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