Small Business Owners Bullish About Business and Their Banking Relationships

Data from the National Federation of Independent Business finds small business owners more likely to look local when choosing a banking partner to support their growth

The turbulence in regional banking over the last few months has caused ripple effects across the business sector, especially for small business owners who took this moment as an opportunity to reassess their banking relationships. “Experts say it’s a good idea for small businesses to diversify funds and make sure they’re in close contact with their banker,” according to AP’s reporting. “But [they] emphasize that in the short term their bank accounts are safe because regulators have shown they’re willing to step in when needed.” Even more good news for banks? Small businesses are largely positive about both their individual business prospects and their primary banks.

New data from the National Federation of Independent Business finds three-quarters of small business owners characterize the current state of their business as good to excellent. Even more, 59% report being “not at all concerned” or only “slightly concerned” about the health of their primary business bank. It should come as little surprise that these business owners have so much confidence in their bank, since they’re likely to be local neighbors. In fact, 67% choose a community or regional bank to meet the majority of their banking needs. And while fintech may be taking a bite out banking’s commercial lending, the NFIB survey finds 85% of small businesses don’t need financing right now.

“Small business banking is a critical component of every small business,” says Holly Wade, Executive Director of NFIB’s Research Center. “Small business owners rely on their banks to help manage cash flow, expand their business, and receive financial advice.” The recent banking failures serve as a reminder to business owners to diversify their assets and regularly take stock of their banking relationships. While NFIB reports that 41% of small business owners talk to their banker every 6-12 months, banks and credit unions can be more proactive in providing financial advice to business owners, like TD does for its business customers in Canada.

As small business owners face the challenges of persistent inflation, supply chain issues and competing for top talent, banks are in the perfect position to deliver expert support – which 76% of businesses report they want, according to J.D. Power. “They are looking to their banks for guidance on things like available credit, tips to reduce fees, and technology to benefit their businesses,” according to Paul McAdam, senior director of banking and payments intelligence at J.D. Power. “This presents an enormous opportunity for banks to deliver comprehensive advice that takes into account a full understanding of the company’s business goals and shows real, committed partnership.”

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