Community banks have edge in small business loans

When Murfreesboro-based Reeves-Sain Pharmacy decided to refinance its bank loan last year, owners Rick Sain and Shane Reeves looked at eight different banks. “Obviously, we were looking for the best deal,” Sain said. And to their surprise they found what they were looking for at Rutherford County-based MidSouth Bank. “We thought they are local, the money would be staying local, and decisions would be made local,” Sain said.

“If I need something, I can call Lee Moss, the president of the bank, and I can’t do that with any other bank.” Community banks often have the edge in securing small-business clients because of the personal attention they can provide and the knowledge they have of their market; many have bankers who have worked in the same market for more than 30 years.

These types of banks offer a full range of services and are able to make decisions locally, based on the individual, rather than strictly relying on financial statements and business plan. Some larger community banks have millions of dollars they can lend to any particular business. Community banks are in a better position to assume the risk of granting loans to small businesses owners that regional and national aren’t.

They can spend time with the existing or prospective business owner and serve as a financial advisor. “For small business, it is huge,” said Tom Swett, owner of the fast-growing Ameri Care Services, a Murfreesboro-based pest control company. “When a company is growing by more than 20 percent, you need capital. “A local bank took a chance on me more than 20 years ago,” he added, because the bankers knew him and his parents.