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How Community Banks Are Wooing Small-Business Customers The money is coming back in business borrowing-- so why don't businesses want it? Here's a look at what some innovative community banks are doing to try to be your lender.

By Gwen Moran

Opinions expressed by Entrepreneur contributors are their own.

Community EffortThe small-business lending situation is a lesson in irony: Despite government efforts to spark more lending, uptake is down. In June, the SBA reported that in the first quarter of 2011, loans to small businesses fell $15 billion, marking the third straight quarter of decline. That figure has been trending downward since 2008--but this drop comes in the wake of major government efforts to incite more lending.

Much of the problem, it seems, is not lack of available capital, but lack of demand for it among small businesses. A combination of recession-born pragmatism and tougher lending restrictions has all but strangled the regular flow of capital from banks to small businesses.

Some innovative community banks aim to change that. Many are moving beyond banking services, helping clients discover financial products they might not have considered. Counseling, education, networking opportunities--these institutions are pulling out all the stops in an effort to spur new lending growth. Will it be enough?

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