The two most popular reasons for making a move are feeling “mistreated” by a bank and seeking better financing options, according to the report from the Washington, D.C.-based small business advocacy group. In particular, small business owners are least impressed with big banks. Of those small businesses that work with big banks, only 14 percent reported the services and finance offerings as “excellent.” At the same time, 43 percent of respondents who work with community banks and 38 percent who use credit unions rate their respective banks as excellent in the same areas.
To be sure, it’s a hassle to switch banks, but sometimes it is worth it. Here are three signs you need to make a change:
1. Abrupt changes in financing terms. “If their credit line gets cut or interest rates rise unexpectedly, I think that is pretty telling,” says John Paglia, a professor at Pepperdine University’s business school. Almost one in four business owners have seen the terms on their loan become worse in the past year, according to the NSBA survey. Some were given no reason, while others were told their business had become more risky or banking standards had been raised. Meanwhile, 29 percent of survey respondents reported having their available line of credit reduced in the last four years.
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