With their willingness to lend, and their often personal relationships with entrepreneurs, community banks have long come through for small businesses. That's still the case, though in these credit-crunch days small business owners may have to do a little more shopping around to find a friendly lender.
Banks with less than $10 billion in assets held 26.2% of total commercial and industrial loans as of mid-2007, but they accounted for an outsize percentage of small ones: 48.7% of loans of less than $1 million, according to the Federal Deposit Insurance Corp. In a 2007 survey by Greenwich Associates, a financial market research firm in Greenwich, Conn., small business owners ranked community banks on average as more willing to lend and offering better terms on loans than large and regional banks. Although practices varied more among community banks than in the other categories, "the most aggressive community banks are far and away more aggressive than the mega or regionals," says Christopher McDonnell, an associate at Greenwich.