United Bank & Trust Blog

Kenny Leonard

Recently a great article appeared in Inc. magazine. Written by Christine Lagorio, she asks the question: How to Choose the Right Bank for Your Small Business

In the article she suggests that a community banks is often the more practical and fitting choice for a small business. Since we live in work in our communities and our shareholders tend to be local a community bank tends to be more understanding of local matters and economies, more supportive of local initiatives and economic drivers and one may argue they are more reliable.

She reiterates the importance of small businesses developing a long standing and mutually beneficial relationship with a local community bank in their area since they more likely to get a loan from their community bank than they are from a large institution.

“Recent research shows that small banks are more likely than large institutions to issue loans to businesses in their community. In fact, though small and midsize banks control only 22 percent of all bank assets, they account for 54 percent of small business lending, according to FDIC data from the third quarter of 2009.”

“There’s also increasing political support for small businesses to partner with small banks. In addition to federal Small Business Association loan incentives, some experts think small businesses could have a hand in solving the credit crunch by simply changing their banking habits – and putting their money in small banks. The Institute for Local Self-Reliance’s New Rules Project has teamed up with Move Your Money, a new initiative by the Huffington Post and Roosevelt Institute to provide resources to companies in switching their business to community banks.”

For the complete article, see the following link: http://www.inc.com/guides/choosing-the-right-bank-for-business.html.

Todd Clark

If you have not already, you will be hearing from your various financial institutions, including United, on new overdraft service regulations affecting your Debit or ATM card. These new regulations come from the Federal Government – and while they are changing many things about banking – we feel they are a good thing for all involved.

Why this is good for consumers:

• This regulation is forcing all financial institutions to be transparent in their overdraft services and policies. It is an exciting time when you can search a banks website and find full disclosure and transparency of their fees in this regard.
• Gives Choices! Not all clients want the same things from their checking account and this puts you in the driver’s seat of your preferences.
• An opportunity to educate yourself on the tools and services – such as balance alerts and internet banking – your financial institutions offer to avoid incurring overdraft fees in the first place.

Why this is good for financial institutions:

• This new regulation is forcing us to rethink our overdraft policies and strategies.
• Financial institutions are being forced to look for new and innovative ways to add value to your banking experience and provide you the services you need and not look to an old model.
• Being transparent to our clients is a win-win and adds trust to the relationship.

There has been a lot of publicity around how “banks charge $32 for a $5 Starbucks” and while this is not completely untrue, that situation and attention is driving an inaccurate perception that these fees are our primary source of income. United is fortunate to have a diverse suite of products and business lines which enable us to maintain strong core earnings while being focused on value added products as opposed to just overdraft fees.

What should you do?

• Educate yourself on each of your financial institutions’ policies around overdraft services and make an informed choice.
• To learn more about United’s overdraft services click here
• To learn more about Regulation E (the Federal Rule) click here

We would love to hear from you – what do you think of overdraft services — will you be Opting In?

Kenny Leonard

In an analysis of small businesses and jobs the SBA Office of Advocacy says that over a recent 15-year period, small businesses created some 65 percent of the net new jobs in the private sector. (http://www.sba.gov/advo/research/rs359tot.pdf)

SBA Advocacy economist Brian Headd notes that many of the new jobs are in new business start ups, but an even larger share are in expanding firms of all sizes—particularly mid-sized firms with 20-499 employees.

“More and more, we’re finding that both new start ups and ongoing high-growth firms have important roles to play in the labor market,” said Acting Chief Counsel for Advocacy Susan M. Walthall. “Fast-growing firms scattered across the economy create a large share of jobs—and because no one can predict which idea will be the next to catch on, it’s important to create an environment in which a wide spectrum can start up and expand.”

Advocacy’s analysis of the quarterly Bureau of Labor Statistics data show that over the 15 years from 1993 to mid-2008, 31 percent of net job gains (jobs created minus jobs lost) came from the opening of new establishments. An even larger share—the remaining 69 percent—were from ongoing firms of all sizes that expanded. (These net figures are based on establishment openings minus closings and establishment expansions minus contractions.)

The business cycle is an important factor in the net creation or loss of jobs. In the current downturn, firms with fewer than 20 employees began losing jobs as early as the second quarter of 2007. From 2008 to the second quarter of 2009, these smallest firms accounted for 24 percent of the net job losses, while those with 20-499 employees accounted for 36 percent; the remaining 40 percent of job losses were in large firms with more than 500 employees.

United Bank & Trust and United Structured Finance Company (USFC) are committed to our local small businesses. We all have a vested interest in helping to grow or help start-up businesses in the local communities we work and live. USFC is proud to be the largest SBA lender in Washtenaw, Livingston and Lenawee counties and is proud to be a positive force contributing to the growth in jobs cited in the study.

Don’t hesitate to call on us with any questions, comments, or concerns. Have a great week!

About The Office of Advocacy of the SBA

The Office of Advocacy of the U.S. Small Business Administration (SBA) is an independent voice for small business within the federal government. The presidentially appointed Chief Counsel for Advocacy advances the views, concerns, and interests of small business before Congress, the White House, federal agencies, federal courts, and state policymakers.  For more information, visit www.sba.gov/advo, or call (202) 205-6533.

For more information and a complete copy of the report, visit the Office of Advocacy website at www.sba.gov/advo.