The National Federation of Independent Business (NFIB), the nation’s leading small business advocacy organization, recently released a survey assessing small businesses’ relationships with banks. Conducted via email from April 14-18, 2023, the survey provides insights into small business banking operations and confidence within the banking system and the general economy.
In keeping with Holly Wade, Executive Director of NFIB’s Research Center, “Small business banking is a critical component of each small business.” She highlighted the importance of a strong, stable small business banking system within the wake of recent bank failures.
The survey found that 67% of small business owners use small or regional banks, while 17% use medium-sized banks (PNC, Fifth-Third, Bank of the West, KeyBank, HSBC, Schwab, etc.), and 14% use large banks (Chase, Citi, Bank of America, Wells Fargo, Capital One, U.S. Bank, etc.).
Customer support emerged as essentially the most crucial factor for small business owners when selecting a bank for business purposes, with 87% considering it very vital. Moreover, 62% of householders reported that low banking fees are crucial when choosing their business bank. Other vital aspects include a convenient location (66%), competitive rates of interest (53%), and online banking capabilities (60%).
The survey also revealed that 74% of small businesses haven’t borrowed money for business purposes within the last three months. Of those that did, 34% were very satisfied with the quantity and terms offered for the financing they received. The predominant reasons for in search of financing were to satisfy operating expenses (37%), expand the business (21%), and replace capital assets or make repairs (24%).
Regarding the health of their banks, 31% of small business owners were under no circumstances concerned, while 19% were very concerned, 23% were moderately concerned, and 28% were barely concerned.
The survey also found that 55% of small business owners use one bank for business purposes, 34% use two banks, and 11% use three or more banks. By way of the present financial state of their businesses, 30% reported excellent, 44% reported good, and 22% reported okay. Only 4% characterised their business’s current financial state as bad.
The findings from the NFIB survey highlight the importance of strong relationships between small businesses and banks, with smaller banks being preferred by the bulk. Small business owners should consider these aspects when choosing a bank to make sure they receive the support and services obligatory for his or her businesses to thrive.
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