FEATURE
PAPER
Small Business and Community Banks
The
following paper was presented at the 2005 SBI Conference.
It was written by Jonathan A. Scott and William C. Dunkelberg
of Temple University.
Abstract
Using survey data
from a sample of U.S. small businesses collected in 1987,
1995 and 2001, this paper addresses the question of whether small
firms obtain better banking
outcomes from community banks. Over the entire period, we
find that small firms using
community banks experience higher quality service are less
likely to have experienced
increases in the number of services with fees or fees per
unit of service, and experienced
improved credit availability. The results for loan terms were
mixed, with no differences
detected for rates charged or compensating balances required,
but a significantly higher
incidence of collateral requirements and lower incidence of
loan fees. These results also
suggest that small firms with limited operating histories
or those with limited financial
data that is used in typical credit scoring models have a
better chance of success for a
loan approval at a community bank.
Read
the Entire Paper...
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Executive Summary from NFIB National Small Business Poll Evaluating Banks
The characteristics
of a financial institution most important to small-business
owners in the conduct of their banking business are in order:
convenient location, knows you and your business, reliable
source of credit, speed of decision-making, easy access to
loan officer, and offers a wide range of services.
The characteristics on which
small-business owners' principal banks are most likely to
perform well are in order: convenient location, offers a wide range of
services, reliable
source of credit, knows the local market or community, speed
of decision-making, and knows you and your business.
The largest shortfall between
what small-business owners think important in a bank and
level of their principal bank's performance are: knows you and your business,
speed
of decision-making, and offers cheapest money available.
The match between importance of bank characteristic and level of bank
performance is similar
on all other characteristics evaluated.
While a majority of owners believe
the overall level of service quality at their principal bank
is unchanged over the last the three years, the percent of small-business
owners providing
favorable evaluations exceed those providing negative evaluations
by a 33 percent to 11 percent margin. The most rapidly improving aspect
of service quality is the growing number of bank services
available.
The only deteriorating aspect of service quality change is staff
turnover.
Just over half (51%) wanted
or needed to borrow for business purposes during the last
three years. Eighty-five (85) percent of potential borrowers obtained
the last loan
they requested. Sixty-two (62) percent of potential borrowers
obtained the loans they sought all the time; 28 percent did most of the
time;
3 percent often did not get what they wanted; and, 8 percent
(or 4% of all small employers) could never borrow the money the wanted.
Half (50%) enjoyed a single
account manager over the last three years and another 30
had two. In contrast, at least 7 percent never had an account manager
and another
13 percent experienced three or more.
Small-business owners are hesitatingly
adapting to electronic banking. A majority (54%) say that
technology at their principal bank has been increasingly helpful in conducting
their
banking business, while 11 percent believe technology is
increasingly getting in the way. The remainder report technology is having
no affect
on them. However, only half do any electronic banking and
only 7 percent have applied for credit on-line. Eighty-three (83) percent
believe that
banks are not forcing technology on them.
Sixty-two (62) percent of small
employers bank within less than 10 minutes of their business
location, an outcome consistent with the importance of knows you and
your business
and the slow adaptation of technology in conducting their banking
business.
| Jonathan
A. Scott
and William C. Dunkelberg. NFIB National Small Business
Poll Volume 5, Issue 7. 2005. p1. |
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CONFERENCES
USASBE
|
| Who: |
United
States Association for Small Business and Entrepreneurship
|
| What: |
USASBE
2007
|
| Where: |
Disney's
Coronado Springs Resort, Orlando, Florida, USA |
| When: |
January
11-14, 2007 |
|
|
|
UAEDRP
|
| Who: |
University
of Arizona Economic Development Research Program
|
| What: |
39th
Annual Arizona Economic Development Course
|
| Where: |
Tucson,
Arizona, USA |
| When: |
January
21-25, 2007 |
|
|
|
AACSB
|
| Who: |
AACSB
Communications
|
| What: |
Strategic
Management Seminar
|
| Where: |
Tampa,
Florida, USA |
| When: |
February
1-2, 2007 |
|
|
|
NVC
|
| Who: |
New
Venture Championship
|
| What: |
New
Venture Championship
|
| Where: |
Embassy
Suites - Portland, Oregon, USA |
| When: |
April
12-14, 2007 |
|
|
|
ICSB
|
| Who: |
International
Council for Small Business (ICSB)
|
| What: |
World
Conference
|
| Where: |
Turku,
Finland |
| When: |
June
13-15, 2007 |
|
|
|
CALLS FOR PAPERS
MEA
|
| Who: |
Marketing
Educators’ Association |
| What: |
2007
Conference
|
| Where: |
Hyatt
Regency - On the Riverwalk, San Antonio, Texas,
USA |
| When: |
April
26 - 28, 2007 |
Submission
Deadline:
January 12, 2007
|
|
|
|
CG
|
| Who: |
Common
Ground
|
| What: |
Learning
Conference 2007
|
| Where: |
University
of the Witwatersrand, Johannesburg, South Africa |
| When: |
June
26-29, 2007 |
Submission
Deadline:
January 15, 2007
|
|
|
|
HIC
|
| Who: |
Hawaii
International Conference
|
| What: |
7th
Annual Hawaii International Conference on Business
|
| Where: |
Waikiki
Beach Marriott Resort & Spa, Honolulu Hawaii,
USA |
| When: |
May
24-27, 2007 |
Submission
Deadline:
January 19, 2007
|
|
|
|
FHSU
|
| Who: |
Fort
Hays State University
|
| What: |
Annual
Business and Leadership Symposium 2007
|
| Where: |
Hays,
Kansas |
| When: |
September
26-27, 2007 |
Submission
Deadline:
September 17, 2007
|
|
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