C-Suite Wednesday – 67% of Small Businesses Rely on Small & Regional Banks

July 19, 2023

Delaney Sexton
Contributing Editor

C-Suite Wednesday – 67% of Small Businesses Rely on Small & Regional Banks

“Small business banking is a critical component of every small business,” says Holly Wade, Executive Director of NFIB’s Research Center. “Small business owners rely on their banks to help manage cash flow, expand their business, and receive financial advice. “ The NFIB conducted a survey on small business banking operations and sentiment in May 2023. This is what small business owners had to say about banking:

Small businesses tend to select small and regional banks for business purposes. Two-thirds of small business owners reported using a small/regional bank. Medium-sized banks follow as the second most common banking option (17% of small businesses), and large banks are the third most popular choice (14% of small businesses). In May 2023, no small business owners reported using online banks.

When choosing a bank for their business banking, small business owners cited customer service as being very important more than any other factor (87% of small business owners). After customer service, small business owners considered the following factors as very important when choosing a bank:

  • Convenient Location (66%)
  • Low Banking Fees (62%)
  • Online Banking Capabilities (60%)
  • Competitive Interest Rates (53%)

Most small businesses only use one bank for business purposes (55%). About a third use two banks (34%) and 11% of owners use three or more banks for their business. Small business owners are loyal to their primary financial institutions. Only 2% of small business owners changed primary financial institutions at the time of the survey, and 84% of small business owners said that they were not considering changing their financial institution. Only 5% were considering changing their primary financial institution.

Recently, small business owners seem to share the attitude of not being interested in a loan. Whenever they did use financing in the last year, the most popular sources of financing that small businesses used were credit cards (70%) and lines of credit (33%). Personal savings were the next choice most popular choice of small business financing (32%). Small businesses were least likely to turn to business loans (26%), loans from friends or family (4%), or home equity (4%).

NFIB Banking Survey