Small businesses hungry for financing will quickly ditch a banking relationship if they are unhappy, according to a new J.D. Power report.
About 22% of small businesses categorized as fast-growing had switched financial institutions within the previous 12 months, compared with 5% of small businesses without a similar growth trajectory, J.D. Power said in its 2016 U.S. Small Business Banking Satisfaction Study.
"Once they start exploring, it often doesn't take long to move from considering switching banks to actually switching," Jim Miller, senior director of banking at J.D. Power, said in a news release Thursday.
But at the same time, those fast-growing businesses are more satisfied with their bank or credit union, giving their current institutions higher grades than business with slower growth rates.
J.D. Power defines fast-growing small businesses as those with yearly sales growth of at least 20%.
The results of the annual study would appear to bolster the confidence of credit unions as many look to expand their small-business membership and boost member business lending.
For institutions that want to win the business of these fast-growing small businesses, they should make the loan application process easy; disclose all fees and pricing; accurately identify the borrower's needs; and offer information on other products, J.D. Power said.
"To retain their business, it is critical [for banks and credit unions] to develop a strong relationship before they need a loan or experience a problem," Miller said.
In J.D. Power's ranking of institutions, JPMorgan Chase performed well in all four geographic regions measured. JPMorgan placed first in customer satisfaction among small businesses in both the South and West regions, and it placed in the top three in the Midwest and Northeast regions. Huntington Bancshares in Columbus, Ohio, was the top-ranked institution in the Midwest, and Capital One Financial was ranked highest in the Northeast.
While credit unions were included in the study, no CUs made J.D. Power's rankings.
