Bank Lending and Relationships

Banking relationships remain a cornerstone of small business financing, with community banks continuing to play a critical role in serving small firms. The strength of the relationships that small businesses have with their banks can influence their credit-seeking experiences and, in some cases, their application outcomes.

The Small Business Credit Survey consistently shows that traditional banks remain an important source of financing for small businesses, with small bank applicants reporting higher approval rates and satisfaction levels than applicants at larger institutions. According to analysis from the Kansas City Fed, community banks continue to hold a greater share of small business loans as a percentage of total loans relative to their larger bank counterparts, underscoring their ongoing relationships with local entrepreneurs.