Community banks are facing increasing pressures to navigate regulatory requirements, preserve capital, and drive deposit growth. As they grapple with these challenges, partnerships with independent commercial finance companies emerge as a strategic imperative, offering a pathway to address the lending needs of small businesses while driving fee income and deposit growth for both parties.
One independent small business lender saw the opportunity in April 2023, following the SVB event. Thirteen months later, their originations doubled.
All it took was a letter.
Armed with a compelling sales message and a targeted list of community bank CEOs, the lender embarked on a simple experiment: delivering personalized letters via overnight mail to key decision-makers. The contents of the letter were carefully crafted to highlight the value proposition of the lender and the potential benefits of a partnership with community banks.
The letter, which addressed the community bank CEOs directly, emphasized the ability of the independent lender to help banks earn new deposits, grow fee income, and handle credit needs beyond their scope in a way that preserves relationships. By offering specialized lending solutions tailored to the needs of small businesses, the lender positioned themselves as a strategic ally for community banks seeking to enhance their offerings and drive growth.
The CEO of the independent lender reflected on the strategy, stating, “We recognized that community banks were facing increasing pressures to navigate regulatory requirements and preserve capital while still meeting the diverse needs of their customers. We saw an opportunity to position ourselves as a solution provider, offering a range of financing options that complemented the banks’ offerings and addressed the unique challenges they were facing.”
The results of the outreach initiative exceeded expectations, with a significant number of community bank CEOs expressing interest in exploring potential partnerships with the independent lender. Within weeks of sending out the letters, the lender saw a marked increase in inquiries and partnership discussions.
“The response was truly remarkable,” remarked the CEO. “Community bank CEOs appreciated the personalized approach and the clear value proposition outlined in the letter. Many saw an opportunity to differentiate their offerings and drive growth by partnering with us, and we were thrilled to see such enthusiastic interest in our services.”
An example of one letter:
Dear [Community Bank CEO],
At [Independent Commercial Finance Company], we understand the challenges facing community banks like yours in today’s competitive landscape. Deposit growth necessities, tighter lending requirements, and new regulatory and capital constraints present formidable obstacles to growth and profitability. We can help.
Our partnership proposal is simple: we can help your bank earn new deposits, grow fee income, and handle credit needs beyond your scope in a way that preserves relationships. Here’s how:
-
- Earn New Deposits: By offering specialized lending solutions through our platform, your bank can attract new depositors and expand your deposit base. Small businesses often seek financing options that go beyond traditional bank offerings, and by referring them to us, you can position your bank as a trusted advisor and gain access to valuable deposit prospects. We can also refer clients in return.
- Grow Fee Income: Our partnership opens up opportunities for fee income through referral fees or revenue-sharing arrangements. By referring customers to us for specialized financing needs, your bank can earn additional revenue without taking on additional risk. Whether it’s equipment financing, working capital loans, or other lending solutions, we have the expertise to meet the diverse needs of your customers while driving fee income for your bank.
- Handle Credit Needs Beyond Your Scope: Capital constraints may limit your bank’s ability to extend credit to certain small business customers. By partnering with us, you can offer a broader array of lending solutions tailored to the needs of small businesses, without straining your own capital reserves or risking relationships. Our flexible underwriting criteria and personalized approach to lending ensure that your customers receive the financing they need while preserving the integrity of your bank’s relationships.
We believe that a partnership between [Independent Commercial Finance Company] and your bank has the potential to unlock new opportunities for growth and profitability. Together, we can strengthen relationships, drive economic growth in your community, and position your bank for long-term success.
I would welcome the opportunity to discuss our partnership proposal in more detail and explore how we can work together to achieve our mutual goals. Please feel free to reach out to me at your earliest convenience to schedule a meeting or phone call.
Thank you for considering this partnership opportunity. I look forward to the possibility of collaborating with you and your team.
Warm regards,
[Your Name]
[Your Position]
[Independent Commercial Finance Company]
[Contact Information]
The success of this initiative underscores the importance of strategic outreach and relationship-building in the world of small business lending. By taking a proactive approach to engaging with community bank CEOs and articulating a compelling value proposition, independent lenders can unlock new opportunities for growth and establish meaningful partnerships that drive mutual success.
CEO of a $4 billion Midwest community bank recently underscored the importance of the partnership, stating, “Our ability to serve the capital needs of many small businesses is limited compared to a few years ago. We’ve recently established a relationship with an equipment finance company and a working capital lender that offers a solution for our customers without challenging our capital position or risking relationships. It’s been a strong driver of new deposits, surprising fee income levels, and effective efforts to preserve relationships.”
As the lending landscape continues to evolve, the power of strategic outreach cannot be overstated. Whether it’s through personalized letters, targeted emails, or face-to-face meetings, independent lenders have a wealth of tools at their disposal to connect with community bank partners and position themselves as trusted allies in the quest for economic growth and prosperity.
