For startup businesses,
large commercial banks historically have not been an attractive
source of financing. However, a large bank can be a good source
for a loan if your business has been operating successfully for
a couple of years.
Today, many of the larger banks claim to target small
businesses because that segment of the financial market is
increasing and lenders are becoming more competitive for every
business dollar. More regional and national banks have increased
their community profiles by creating small business departments
that actively solicit local business, participate in small
business seminars, and sponsor local business events.
In addition, these larger banks are at the forefront of
developing technology that will allow them to reduce the time
and cost of their loan application processing.
While a large bank's "software review" of your loan
application may lack the personal involvement you consider
essential for your business needs, the availability of this
option at least broadens the supply of money and may make all
lenders more competitive in their loan rates and terms.
Although many large banks are making efforts
to compete for small business borrowers, the
target customer for these banks is still more
likely to be a "big" small business,
with a proven track record and significant
available collateral. These institutions remain
very conservative lenders that will require
significant documentation and often more than
100 percent collateral to support a loan.
Moreover, automated "cookbook" recipes
for reviewing business loan applications will
not favor those small business with unique
profiles or with perceived deficiencies in loan
application criteria. In short, aside from
secured loans and mortgage financing, larger
banks are still not a major participant in small
business finance. You may want to give a big
bank a try, but your best bet may remain the
local, community lender.