Berkeley, California in the 1960s was a radical place. The vibrant, politically active culture would inspire future generations to challenge the status quo and stand up for their beliefs. It was during this charged, forward thinking era that a Dutchman named Alfred Peet opened a small store in Berkeley selling coffee beans.
Displeased with the quality of coffee in America, he was moved to create change. Peet tapped into his background in the coffee trade and introduced the local scene to a dark, rich roast of unquestionable superior quality.
His inspired act motivated three of his friends, two teachers and a writer, to start their own coffee bean venture. As you might expect, two teachers and a writer aren’t a group that’s exactly flush with cash. As the story goes, in order to see their dream through, they first pooled what few funds they had and then borrowed money from a community bank. Driven by a spirit of determination, hard work and the right resources, their small business became the largest coffee roaster in the state – in less than a decade.
While encouraging, these kinds of stories are rare. According to data from online lending brokerage Biz2Credit, large banks only approved 20% of small-business loan requests in June 2014. Although 20% represents an all-time high since the recession, it still speaks volumes about the current climate for innovators and job creators looking to large banks for support.
This void appears to be a perfect opportunity for community banks to step up to the plate. But with suffocating regulatory standards and the all-too-familiar question posed by regulators, “why did you make that loan?” most community banks are reluctant to take the risk. In fact, banks are just as likely to face the question from regulators as they are to be criticized by another agency for not making the loan. It can feel like a no-win situation.
Just as a generation of free thinkers challenged the Establishment during one of the most turbulent times in American history, community bankers should feel challenged to do the same. Be brave. Serve your purpose. Serve your communities. Remember, in the end, you know your customers better than anyone.
In 1971, Seattle First National Bank took a chance on a trio of entrepreneurs driven by a passion for coffee. The coffee bean roaster would eventually transform into a coffeehouse that would expand across the globe. Perhaps you’ve heard of them. Perhaps you’re enjoying the fruits of their labor (literally) right now. Starbucks is the largest coffeehouse company in the world. In large part thanks to a loan from a community bank.
Community banks play a vital role in the health and wellbeing of our economy and local communities. This is an era of opportunity. How will you make an impact?