Steering the right course is also important for financial institutions. It is in their best interest to have well-informed and prepared small business customers. This helps the customers become sound borrowers with growth potential. Growing firms help create economic value in their communities and additional profitable business relationships for their banks. While providing advice and assistance to inexperienced small business customers and loan applicants can be costly, many institutions do regularly provide such advice and assistance.
Financial institutions can help screen information resources and locate assistance.
This can be done through a mentoring relationship with a small business customer or supplier, through the normal loan application process, or by the selection of a knowledgeable and reliable third-part broker organization in the community to help prospective small business borrowers. For community bankers in small towns, such assistance may take the form of informal advice to bank customers or occasional free seminars sponsored by the bank on such subjects as business tax and estate planning or a business development plan. Community bankers often take pride in knowing their customers, their particular needs and capacity, and the way to tailor financial technical assistance to meet those needs. Many larger institutions, several of which you will hear from at this conference today, have invested considerable resources in operations designed to provide hands-on consultation and assistance to large numbers of small firms. Another common strategy is to help create or fund a specialized small business development unit or subsidiary organization within the bank.