The story about sponsoring local businesses is nice, but really undersells how community banks drive economic activity: they finance a lot of property developme

The story about sponsoring local businesses is nice, but really undersells how community banks drive economic activity: they finance a lot of property development. The sandwich shop is not getting a big business loan anyways, but often property developers are intimately tied to local banks in their financing. Commercial real estate (CRE) is deeply linked to small banks in a way that's hard to understand. They often are willing to lend at lower rates, are more flexible about financing structures, payment, etc. This is the kind of non-scalable business that the big banks don't really want to touch and is an important driver of CRE activity. I have a friend who develops hotels in NYC for example and even there, a stone's throw away from wall street and HQ of the largest banks on the planet, their financing is often much easier with a small community bank that have essentially specialised in NYC CRE lending.