The perks of going local with your bank account | BiS | Business in …

Sarah Gillis switched from a national bank to a local one in New Jersey as a matter of principle.

“I feel like my voice matters more in a smaller bank,” says Gillis, who closed her account at a national bank because she disagreed, she says, with some of its corporate investments. She opened an account at Peapack-Gladstone Bank by her home in Warren, New Jersey, about a year ago.

But when asked her thoughts on her new bank, it’s the perks and lack of fees she applauds. Her out-of-network ATM fees are reimbursed by Peapack-Gladstone and she gets $8 back if she uses her debit card at least ten times a month. “I just think it’s a great bank,” she says.

For consumers like Gillis, switching to a community bank — typically defined as a smaller bank that is locally owned and operated — is an action rooted as much in practicality as it is in ideology. Lower and fewer fees, and the allure of keeping money local can be compelling reasons to switch.

Downsides persist

Community banks still won’t be as convenient for many people as national banks. ATM access, for example, can be a challenge without the large networks enjoyed by national bank customers. Some 48 percent of community banks belong to a fee-free ATM network, a 2013 survey by the Independent Community Bankers of America found, but that leaves a large swath of community bank customers paying additional fees when using out-of-network ATMs.

Limited availability of cutting-edge technology continues to be an issue. The number of community banks offering mobile banking services was 81 percent last year, up from 71 percent the year before, according to a report by the Federal Reserve. But that’s still a sizeable number of banks without services many customers consider essential, such as the ability to check account balances by smartphone.

The report noted mobile banking was “difficult to implement for small and mid-size banks due to cost and expertise.”

Keeping it in the neighborhood

Fans of community banks point to the advantages, starting with a generally more favorable fee structure. These banks are more likely to have fewer checking account fees and lower overdraft fees than big national banks, according to a recent survey by Pew Charitable Trusts.

Only about 10 percent of small banks surveyed reported charging monthly service fees on checking accounts; such fees are common at large banks, though they can sometimes be avoided. The median overdraft fee for small banks was $32, compared to $35 for large banks.

And for many, the chance to keep money local is a reward in itself.

“People feel that there is an authenticity to a locally owned business,” says Terry Jorde, senior executive vice president at the Independent Community Bankers of America. “That’s true whether it’s a hardware store, a locally owned restaurant, a flower store or a community bank.”

Community banks can also play an integral role in local economies, especially in supporting small businesses.

More than 50 percent of small-business loans came from community banks, researchers at Harvard Kennedy School reported in 2015, as did 77 percent of agricultural loans.

Small businesses were also more likely to be approved for some form of a loan from community banks — 76 percent, compared to 58 percent at national banks, according to the Federal Reserve Bank of New York.

Community banks aren’t for everyone. Those who move frequently from one city to another may find it inconvenient to change community banks each time, something that’s not an issue for those who bank big.

Gillis, for one, believes the advantages of going local outweigh the drawbacks. “I’ve realized it’s not that hard to open a new account at a different bank or close an account,” she says.

How Do I Get a Business Loan to Start My Business?

For many budding entrepreneurs, a traditional business loan may seem like the best option for getting your endeavor off the ground. However, most banks and lenders require criteria that a newly launched business won’t be able to meet.

What are those requirements, and what are your alternatives if you can’t meet them? Here’s what you need to know.

Requirements for Traditional Business Loans

When you apply for a traditional business loan, a lender will look at your personal and business’ credit profile and financial information. Additionally, lenders are likely to require a meaningful paper history of your business revenue, income and expenses.

If you’re just launching your business the problem becomes immediately clear, since you’re unlikely to have a business credit profile OR an extensive history of revenue and expenses. For that reason, new entrepreneurs usually need to find funds through alternative means, and most will rely heavily on your personal credit profile, personal income, and may require personal guarantees.

Checking YourPersonal Credit History

Since you’re just starting your company, you don’t have a business credit profile (although you should start to establish one, which you can learn how to do here). But that doesn’t mean you’re out of luck.

The first step is to check your personal credit scores. Like bank loans, alternative business loans generally have credit requirements as well, so knowing your scores and what’s on your report will give you a better idea of what financing options you’re likely to qualify for. (You can check your personal credit score and summary report with a free Nav account.)

Illinois could be first state to regulate online small business loans


Illinois could become the first state in the country to regulate online loans to small businesses.

Business loans done over the Internet are likely to have little to no oversight regarding how they are presented to the lendee. State Sen. Jacqueline Collins (D-Chicago) and a group of bipartisan state and city of Chicago officials want to create some ground rules for the online outlets that Collins said are largely good companies but can stray into deceptive habits.

All we’re trying to do is help those responsible lenders, but also create some oversight to those who are moving in the direction of being predatory, Collins said.

The Small Business Lending Act of 2016 would require the online companies to register with the Illinois Department of Financial and Professional Regulation as well as always list their interest rate in annual increments. Collins said monthly or even daily interest rates, which are currently offered, can fool businesses into agreeing to rates she described as gouging.

The measure would make online loan outlets limit the number of late fees and early termination fees they are able to impose.

There’s a lack of uniformity among small business loan offers and it makes it difficult to compare loans and to fully understand the terms of the loan, Collins said.

Collins said opponents to the legislation have, surprisingly, included larger banking corporations. She believes they are providing the money for some of the online loans. Opponents say the state should let the federal government handle the regulation of online loan outlets. Collins discounts that idea, saying it could take a decade before anything happens.

That could be five years. That could be ten years, Collins said. Why should that preclude us on the state level from dealing with a problem that exists in the state of Illinois?

Collins said she plans on presenting the bill once the General Assembly reconvenes this November. State Sen. Karen McConnaughay (R-St. Charles) is a co-sponsor of the bill. Collins said the idea for the legislation originated with Chicago Treasurer Kurt Summers.

Square Capital Starts Offering Loans More Broadly

Its not surprising that Square is expanding its lending program beyond just the millions of businesses who use Squares point of sale hardware. New customers will only continue to grow the already burgeoning business. In the second quarter of 2016, Square extended nearly 34,000 business loans totaling $189 million, an increase of 123% year over year and 23% from the previous quarter in 2016. Revenue from Square Capital, and the company’s other software services, was up 130% to $30 million from the same quarter in 2015 and up 25% from the previous quarter in 2016.

The small business lending market will likely also get more competitive for Square as American Express is set to debut a new lending arm later this year.

The goal is to serve all 30 million small businesses in the US with Square Capital, Reses said.

Greece’s National Bank Securittises Business Loans To Raise 300mn

National Bank of Greece (NBG) said on Monday it had concluded the securitisation of business loans which would allow it to raise up to 300 million euros in medium-term funding.

The bank said it would place the senior notes with the European Investment Bank, the European Investment Fund and the European Bank for Reconstruction and Development.

It was the first securitisation transaction since 2007, National Bank said.

It said the transaction sought to enhance the access of Greek small to medium sized businesses to ‘affordable financing’.

Additionally, the bank said it would launch new lending for investment projects in Greece in November, covering a two year period in which more than 2,000 small to medium sized businesses and midcaps stood to benefit.
Source: Reuters

Nova Scotia writes off $8M in bad business loans

Nova Scotia wrote off nearly 10 times more in bad loans in the last fiscal year compared to 2014-2015.

Almost all of the $8 million written off by the province in 2015-16 is attributable to a failed venture capital investment in Origin BioMed Inc. totalling $7,878,219.

There was a small loss $91,767 on L amp; S Lumber Limited.

The final write-off total amounted to $7,969,986, up sharply from $818,215 booked as a loss on three investments in 2014-2015.

Nova Scotia Business Inc. CEO Laurel Broten defended the Origin BioMed loan Thursday.

That company is an investment the province made some time ago through NSBI and it went into receivership, she said.

Nova Scotias venture capital portfolio was valued at $13,055,000 as of March 31 2016, down by more than $2 million from last years total of $15,452,000. This marks a 15.5-per-cent decrease from the previous fiscal year.

However, the 2015-16 year was not all bad news for Nova Scotia, as the province, through NSBI, managed to attract 20 companies to either set up shop or expand their existing operations. This is a 11.1-per-cent increase over the previous fiscal year.

Broten told the Chronicle Herald that these companies were not necessarily serving the local market but rather using Nova Scotia as a base to export their products and services elsewhere.

Exporting and trade in general is an important component of the path to sustainable economic growth in Nova Scotia, and we are committed to supporting businesses here and around the globe, said Broten in a release Thursday.

Looking ahead, the province will continue prioritizing exports from Nova Scotia and targeted investment attraction to help stimulate economic growth.

Having helped seven new companies reporting their first export sale in this fiscal year, NSBI aims to work with a minimum of 15 companies across Nova Scotia to become first-time exporters in 2016-17.

In addition, the NSBI approved 15 film and television productions in its first year of administering the Nova Scotia Film and Television Production Incentive Fund.

There is still much to be done so our client firms can thrive, and not just survive, in our ever-changing global economy, said Broten.

Our plans are built based on the conversations we have had with businesses across the province and from the lessons we learned in 2015-2016.

1MDB: We never offer business loans

1MDB has never offered business loans nor has it ever authorised any party to collect payment or charge fees for processing any application relating to the company.

In a statement, the company said it has been informed that certain individuals were posing as 1MDB officials to offer business loans and collect processing fees.

A police report has been lodged on this matter, said 1MDB.

We request anyone who has been approached in relation to this matter to immediately lodge a police report, it added.

– Bernama

UAE personal loans jump 7.5% to Dh430 billion

Dubai: Unpaid credit card balances, car loans and other forms of personal borrowings continue to hound consumers in the UAE, with total debt levels rising by 7.5 per cent over the past year.

The average resident in the country now carries a debt burden worth Dh42,600, as the total amount of personal loans reached Dh430 billion during the second quarter of 2016, up from Dh400 billion a year earlier.

The latest debt data provided by the National Bank of Abu Dhabi (NBAD) cover the amount of car, credit card and business loans that cash-strapped consumers owe their banks as of June this year.

A number of households have been feeling the pinch and left with no cash buffers as the economic environment remains subdued, owing to the decline in oil prices. Employment opportunities are still limited and reports of job cuts haven’t completely settled , while the high cost of living continues to put pressure on household budgets.

In a recent survey, a significant number of residents said that the high cost of housing and rising education and utility bills remain their biggest concerns. Others, especially Western expatriates and Arabs, are also worried about potential job losses, while 44 per cent of UAE nationals are worried about mounting loans.