Banks and credit unions have the funding; small-to-medium sized businesses need it. So how come the two sides remain disconnected?
While banks often struggle to lend to microbusinesses profitably, leveraging their branch sales force effectively can improve the odds.
Success in small business banking requires taking it seriously, paying for performance, focusing on deposits, building partnerships and learning to cross sell.
As commercial banking becomes more important to institutional profitability, bankers need to develop comparative benchmarks in this area similar to those used in retail banking.
In order to originate small business loans profitably, banks need to increase cross sales, improve internal systems and/or partner with alternative lenders.
Serving small businesses effectively requires business practices, organizational constructs, and value propositions targeted to this particular market segment.
Small business lending requires a strategy that enables you to clearly define and measure success.
Banks that want to participate in small business lending should understand how asset-based lending differs from uncollateralized consumer lending.