- Hispanic Resources
About 10% of small businesses have switched financial institutions during the past year, according to Leigh Sherman of Cornerstone Advisors.
“Small businesses are leaving megabanks because the owners are concerned about future access to credit,” Sherman notes. “They’re feeling alienated by megabank mergers that result in poor or inconsistent service. This represents an obvious opportunity for credit unions.”
And the opportunity is large. Consider that:
- There are 27 million small businesses in the U.S., six million of which have fewer than 20 employees;
- Fifty percent of all U.S. employees work for small businesses;
- Small businesses spend $500 billion on financial products and services;
- Banks with more than $50 billion in assets have 55% of the small-business market, while credit unions have 8% of the market;
- Fifty-four percent of small-business owners have their business and personal accounts at the same financial institution; and
- About 50% of small-business owners use online banking, 44% use direct deposit for their employees, 37% use online bill pay, and 30% use smart phones or PDAs.
“It’s a fallacy to assume loans account for most of the profit of a small-business relationship,” Sherman says. “In fact, deposit services account for about 60% to 70% of the profit.
“In the small-business relationship, the credit card is trump,” he continues. “Credit cards fund more small businesses than traditional bank loans because of the convenience factor and the 30-day float. About 60% of small businesses use credit cards to finance basically everything.
“And the use of social media is growing exponentially among small-business owners. Many business owners use Facebook and Twitter instead of developing their own websites.”