By Kimber Lanning

The most recent Biz2credit Small Business Lending Index reports that lending approvals from small banks are up to pre-recession lending levels, hovering at 49.7 percent. This is good news for the Arizona economy, which hinges on a healthy local business climate. Small businesses are the backbone of our economy, and they need to have access to capital in order to sustain themselves. When their access to capital is limited or even stifled, they are unable to grow their companies, hire more people or increase their spending. This limitation doesn’t just impact businesses; it impacts everyone in the community in the form of lost opportunities, smaller tax revenues and fewer jobs.

During this last downturn, it became painfully clear that Arizona’s businesses suffered greatly due to their lack of access to capital. Loans were called, applications denied, and local capital all but frozen. Arizonans have deposited 96 percent of their money into out-of-state banks. Of that money, about 75 percent ($65.5 billion) is in three big banks that have no local decision-making regarding lending. Recent national reports show that big banks are back up to 17 percent loan approval for small businesses from a low point of just 13 percent in 2012. There are many reasons that number is so low, not the least of which is that big banks don’t offer local decision-making. All loan decisions at these big banks are made in the bank’s home state by people who may not necessarily understand our local market or have personal relationships with the local business owners here in Arizona.

In order to stimulate our economy, we need ample access to small business loans from bankers who care about the long-term health of the business and community.

Arizona’s Community Banks have remained committed and supportive through the tough times. When a community bank receives more local deposits, it has more local money to lend right here in Arizona where they are chartered. In addition, when we have locals making the decisions about lending, more money gets out into the community because loans don’t have to fit in a box. Community banks can be creative and come up with catered solutions for each business. This kind of relationship between business owner and local banker is the difference between thriving communities and those that are stifled and slow to grow.

There are many outstanding community banks including Pinnacle Bank, the #3 lender of all banks in Arizona in terms of dollar volume for SBA lending last year. In addition, the top community banks in loan growth for 2013 are Arizona Bank & Trust, Alliance Bank, Meridian Bank, First Scottsdale Bank, Metro Phoenix Bank, and Gateway Bank. Another way to measure success is to look at the top community banks in the state for capital as a percentage of assets, which are West Valley National Bank, Meridian Bank, First Scottsdale Bank, Pinnacle Bank and Gateway Bank. Gateway and Pinnacle have also been named in the top ten in all surrounding southwestern states in terms of capital, asset quality, earnings, liquidity and growth.

Our community banks are more likely to fund the small businesses that are the engine of our economy. The more these banks have in deposits, the more they can lend back into our communities. Other states with strong economies, such as Texas, have invested heavily in their community banks, and they also weathered the national recession better than most.

It would serve all of us well to have a thriving economy, and banking with community banks is the best way to ensure our businesses have access to the capital they need.