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Who’s Lending? How to Find Small Business-Friendly Banks

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Who’s Lending? How to Find Small Business-Friendly Banks

By Caron_Beesley, Contributor
Published: August 6, 2012 Updated: January 20, 2016

If you’re seeking financing for your business, you may have noticed promising signals in small business lending. Banks overall are reporting the biggest increase in lending to small businesses in four years. Month over month, the numbers are improving. Reuters reports that in May 2012, small business lending reached its highest level this year, up 18 percent over the previous year. (For more data read: Business Lending Showing New Signs of Strength).

But who’s lending? If you’re shopping for a business loan, here are some tips for finding a small business-friendly bank in your town.

1. Finding Lenders - Data Proves Community Banks Favor Small Business

If you’re in the market for credit, one good option is your community bank. Thanks to the Small Business Lending Fund program, part of the Small Business Jobs Act of 2010, community banks have increased their lending to small businesses across the country to the tune of $3.5 billion, blogs the U.S. Treasury. You can find a list of community banks that are upping their lending here.

Other sources of small business lending include this Banking Study from the SBA. It provides information on the lending activities of specific depository institutions by name, loan amounts and state.  Keep in mind, though, that this study focuses on the 12-months ending in July 2011, and is not a current snapshot.

You can also refer to new online tools like BankingGrades.com (which measures loans in relation to deposits) or Enterpreneur.com’s Best Banks for Entrepreneurs.

Another initiative created by the Jobs Act to spur $15 billion in lending is the State Small Business Credit Initiative. Participating states – not all 50 participate – use federal funding from the Treasury Department for state-based programs to boost private lending to creditworthy small businesses and manufacturers in a variety of ways. Find out more about participating states via this interactive map.

2. Seek Out Certified or Preferred Lenders for SBA Loans

If you’ve had trouble getting a loan in the past or your business may not qualify for a traditional business loan, an SBA-backed loan is another option. SBA does not lend business owners money directly; it provides a guarantee to banks and lenders for money they lend to small businesses.  SBA backing mitigates the risk for banks and lenders and makes them more inclined to provide loans to small businesses who don't qualify for traditional loans, often because of collateral.

If you are looking for an SBA loan, seek out a bank or credit union that has been through this process before or one that is a Preferred SBA Lender – in other words, a lender with a proven track record in processing and servicing SBA loans.

When seeking an SBA loan, it’s worthwhile talking to your local SBA office, Women’s Business Center Small Business Development Center or Veterans Business Outreach Center. All four can help provide advice about SBA loans.

3. Understand the Fundamentals of the Lending Process

Once you have your short list of commercial lenders, educate yourself about the fundamentals of business financing. Every bank will be interested in the viability of your business, its cash flow and collateral. For insight into what you will need to provide and discuss with your lender, refer to this traditional Business Loan Checklist or this SBA Loan Application Checklist.

SBA offers several free online courses about how business financing and SBA-guaranteed financing work. These self-paced courses take about 30 minutes.   

4. Find a Lender that Fits your Business and your Needs

Your relationship with lenders can last many years, so it’s important to be comfortable with them, their business values and other banking/ financial services they can offer. Find out who the decision-makers are, how many people you will have to deal with, and if your bank offers regular one-on-one advisory sessions.

Useful Resources

  • SBA Direct – Find SBA lenders in you area via this online tool.
  • SBA Loans and Grants Tool – Search for SBA loan programs for which your business might qualify (SBA doesn’t offer grants).

Related Blogs



About the Author:

Caron Beesley


Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley


In initial stage small business is lending their money from Banks. It has nice to read this article and give me an idea. I will share this idea with my colleagues. Thanks for sharing this beautiful idea.
Of course, if the borrower will have to pay is determined. Besides, if they did, they would have borrowed a determination is made ​​out of money to pay debts.
This blog can help advise you on how to find small business-friendly banks
If you can qualify for an SBA loan, then you should seek an SBA lender because it is probably going to be the most inexpensive option available to your business. For those who don't qualify but have established businesses and a healthy cash flow, the other option these days is alternative financing. Do your homework first and figure out how much of a loan you need and can handle before you set out shopping.
Another great article Caron! I'm glad you wrote on this subject because there are lenders that love to lend to small business owners! Although, the small business owner may need to do a little more searching past their traditional bank if they do not yet meet those requirements, there are lenders that are funding even revenue based loans to small businesses that may only have been in business a year or two! I also really agree with your 4th point about choosing a lender that fits your needs. Some business owners really care about getting a non-restrictive business loan so they can use the cash as they wish to help their business, some people may not care about that as much as something else. Again, great article!
I am glad to see this article, somehow a myth has been developed that banks do not want to do loans, and that banks do not want to do small business loans. The truth is most commercial banks need to put their money to work {loans} or they fail. From personal experience after working in four different financial institutions, I can testify that we love small business borrowers as long as the risk profile is there. Small business borrowers are usually more profitable than large borrowers. In today’s low rate / low loan demand environment, large strong borrowers have most of the leverage on their side. As a result, strong borrowers are squeezing excellent rates, and demanding concessions from the lenders. As a banker, I would much rather have my money working at 8% than at 2.5%. Small loans mean diversification. If a lender does 100 loans for $100,000 instead of a loan for $10,000,000 to a large borrower, the lender can afford the higher probability of default associated with the smaller less established companies specially if that additional risk is priced into the interest rate that I am charging. Small business relationships are also attractive because most keep a relatively healthy level of deposits, which allows the bank to fund most of their borrowing with their own money.
From what I have seen, banks love to say they are lending but that is just not been the case for us.
Very good
I love reading this blog. There is so much great information here for businesses. What people also need to know is that a good business plan can help you get a loan. Like you mentioned in this article, banks want to know as much as possible about your business. I would also suggest for people to read this article by Franchise King http://www.sba.gov/community/blogs/importance-plan. This article written the last week talk about the importance of business planning.

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