In today's economic environment, many community banks continue to step up to the challenge of providing credit, particularly to small businesses. Yes, we have money to lend to qualified borrowers, including the capacity and willingness to lend.
Community banks stand by their local communities and their customers in good times and in bad. While community banks represent about 12 percent of all bank assets, they make 31 percent of the dollar amount of all small business loans less than $1 million. Nearly half of business loans under $100,000 are made by community banks, according to the Independent Community Bankers of America.
While we are seeing signs of stabilization, we are also seeing continued high rates of unemployment. Small business lending has always been a cornerstone of community banking and is very important in supporting local job creation and a healthy local economy. At the same time, banking regulators have also sent clear messages that they are looking at higher capital and liquidity standards for financial institutions of all kinds, as well as increasing regulatory restrictions. Therefore, while you may find your banker will ask more questions, we really want to have the opportunity to talk with you about how we can assist in growing your business and helping our economy to recover.
In addition to standard lending, another great resource for our customers is the Small Business Administration's loan programs. These programs allow banks to support our customers through loans guaranteed by the SBA. We continue to fully service the loan and maintain a traditional relationship with our small business customer.
What do banks look for when making decisions about small business loans? As always, we look for credit capacity and will conduct an analysis and review of financial statements and personal finances. We want to know your business experience, and feel confident in your business plan. For example, how accurate are your revenue and expense projections and what is the state of your particular industry? Banks will also want to know your capital level and the collateral for the loan. Finally, banks expect to be repaid according to the terms and conditions of their agreements.
Federal Reserve Chairman Ben Bernanke recently said, "While maintaining appropriate prudence, lenders should do all they can to meet the needs of legitimate, creditworthy borrowers. Doing so is good for the borrower, good for the lender and good for our economy."
Community bankers wholeheartedly agree with Bernanke and stand ready to assist small businesses in the communities we serve.
Brandon is senior vice president and Southwest Washington and Oregon regional manager for Tacoma-based Columbia State Bank.
