Local banks offer dedication, expertise to small business

BY CURT EVERSON

Jeff Plagge’s day job as a banker is to steer the ship as the president and CEO of Northwest Financial Corp of Arnolds Park, Iowa In his other role as chairman of the American Bankers Association, Plagge speaks forcefully and often on behalf of the interests of this nation’s banks and bankers In recent testimony to members of the U S Senate banking committee on the current state of community banking, he stated in part: “The state of our community banks is strong, but the challenges we face are enormous As I travel the countr y in my role as chairman of the ABA, I am constantly impressed by how resilient community bankers are and how dedicated they are to serving their communities ”

As e v idence of that dedication, Plagge cited some results from the FDIC’s 2012 study on communit y banking show ing that communit y banks, w hile accounting for only 15 p ercent of the nation’s banking assets, held 46 p ercent of al l the smal l lo ans to businesses and far ms made by FDICinsured institutions

Viewed through the lens of a recovering economist and banking trade association executive like myself, those numbers are loaded with public policy implications But what do they mean to an entrepreneur with an idea that he or she wants to turn into an economic reality, or to a small business owner who is looking to expand? Here is what I think: If you need capital to realize your dreams, go see your local banker! They know small business.

I recently witnessed a testimonial about the value of a trusted, knowledgeable banker A husband and wife team who own and operate a grocer y store located in a small bedroom community in southeastern South Dakota were talking about their ever yday challenges competition from big grocer y stores in a larger neighboring community, working side by side ever y day with the same person you see at dinner each evening, keeping abreast of workplace laws and regulations. These young business owners were ver y much up to meeting those challenges But I was particularly struck by what those folks had to say about the importance of the relationship they had w ith their trusted banker. While they generally u n ders to o d t h e ro l e t h a t U S Sm a l l Bu s i n e s s Administration loan guarantees played in making their financing package work, they were relieved to be able to leave the technical work of securing and managing the contractual elements and technicalities of those guarantees up to their banker. They also placed great value on the personal interest that their banker took in their long term success

Please don’t misinterpret anything I am saying as being critical of the SBA or its programs. SBA programs are a valuable source of capital, providing much-needed risk mitigation for banks and their customers. SBA staffers I have met over the years are good people who continually look for ways to make their programs more customer-friendly But small business owners don’t need to be SBA program experts. That is where the local business banker comes into play

The economic success of communities of all sizes is driven largely by a vibrant small business sector. Business bankers and main street banks have the capital and expertise to foster that success PB

Curt Everson President South Dakota Bankers Association ceverson@sdba com