Increase Your Small Business Lending to Strengthen Your Community
Small businesses are the heartbeat of local economies, driving innovation, generating employment, and fostering community growth. In 2024, there were approximately 31.7 million small businesses in the United States, making up an astounding 99.9% of all U.S. businesses (Card Processing Hub). These enterprises do more than just provide goods and services. They shape the culture and financial health of the communities they serve.
For local banks and credit unions, supporting small businesses through increased lending is more than just a smart financial move, it is a meaningful investment in the well-being of their communities. By extending credit and financial resources to entrepreneurs, these institutions help stimulate local economies, create jobs, and reinforce the social fabric that holds neighborhoods together.
The Economic Engine of Communities
Small businesses are critical to economic vitality. They employ approximately 61.6 million people, making up 45.9% of the U.S. workforce (Forbes). Their collective contributions to the economy are substantial, generating nearly $5.9 trillion in economic activity and accounting for roughly 43.5% of the nation’s Gross Domestic Product (GDP) (U.S. Chamber of Commerce). Beyond their financial impact, small business owners are deeply engaged in their communities, with 90% donating to local groups, charities, and schools, while 76% volunteer their time for civic activities (NFIB – NFIB Small Business Association).
Their contributions go beyond dollars and cents; they foster a sense of community and mutual support.
The Imperative for Local Financial Institutions
Local banks and credit unions are uniquely positioned to empower small businesses and, in turn, strengthen their communities. By providing financial resources, they not only support entrepreneurial ventures but also contribute to economic revitalization. Lending to small businesses helps drive job creation, increases consumer spending, and sustains a robust local tax base; critical elements of a thriving community.
Financial institutions that participate in Small Business Administration (SBA) lending programs can benefit from federal loan guarantees, mitigating risks while improving profitability. While specific earnings from these loans may vary, SBA support makes them a viable and attractive option for lenders.
Promoting diversity and inclusion is another key advantage of increased small business lending. By extending credit to entrepreneurs from varied backgrounds, banks and credit unions help create a more equitable business landscape that reflects the community’s diversity. This inclusivity strengthens economic resilience and fosters innovation, ensuring that opportunities are available to all.
Strengthening Community Ties
The impact of small business lending extends to enriching the very culture and identity of a community. Local businesses often preserve traditions and heritage, reinforcing a sense of pride and belonging among residents. They are also more attuned to the specific needs of their customers, offering personalized products and services that enhance the quality of life.
Moreover, a diverse and thriving small business sector helps communities weather economic downturns. When local businesses flourish, they create a more resilient economy, capable of withstanding financial challenges and ensuring long-term stability.
A Call to Action
Increasing small business lending is not merely an economic strategy; it is a commitment to fostering stronger, more sustainable communities. By supporting small businesses, local banks and credit unions do more than enhance their financial performance. They play an essential role in building thriving neighborhoods. This partnership between financial institutions and entrepreneurs is a powerful force, driving economic growth, preserving cultural identity, and securing a prosperous future for all.
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