Federal proposal could harm Minnesota’s community banks and small businesses

Local entrepreneurs and small businesses are the heartbeat of Minnesota communities. As a lifelong Minnesotan representing eastern Carver County in the state Senate, I’ve had the opportunity to engage with many of our small business owners, their employees and their families — all working to make valuable contributions to the community and our local economy. In my district, these tight-knit relationships allow businesses to work together with a shared investment in helping our communities thrive. However, a new federal proposal from the FDIC could threaten how our local businesses operate and grow. 

These days, it’s important for our smaller community banks to stay competitive so they can offer tailored financial services that meet the specific needs of their local customers. To remain competitive, community banks need access to modern and diverse streams of funding as resources beyond traditional direct deposits. Unfortunately, a recent proposal by the FDIC aims to change the rules surrounding brokered deposits and other innovative funding sources, which help our community banks secure the capital they need to provide loans and other services to their customers. While this proposal may be flying under the radar at the moment, it has the potential to disrupt our communities by putting both banks and the small businesses they serve at risk.

Starting your own business is an expensive undertaking. From construction to labor to products and more, building a company from the ground up takes considerable grit and the right investments to make things happen. That’s why many of our local businesses partner with community banks because they understand the needs of the local market. If these banks can no longer access the capital they need, our local entrepreneurs and businesses will be faced with greater financial strain and fewer options to support their daily operations and growth. 

Additionally, it’s no secret to small businesses that the DFL trifecta passed a number of harmful laws and policies over the past two years that make it harder for our small businesses to succeed. I’ve heard from many small business owners in my district that our state is making it more and more difficult to do business here, hampering opportunity, economic growth and the competitiveness of our region. Now, with additional potential restrictions from federal regulators, we must stand up to protect these businesses as well as the health of our local economy. Further, the FDIC’s proposal will negatively impact community investment and opportunity and even reinforce the financial barriers to business ownership — especially for women and minority-owned businesses and first-time entrepreneurs.

From the seven-county metro to Greater Minnesota, it’s vital that we support the small businesses that make up our vibrant communities. If the FDIC’s changes come to pass, these businesses will feel the effects rippling from community banks because they would struggle to finance the loans and other necessary tools that keep our neighbors in business. We must ensure that our smaller banks have access to the innovative solutions they need to remain trusted financial partners for those who depend on their services. Because of this, I urge the FDIC to reconsider this rule change to protect the hard work and livelihoods of Minnesota businesses and entrepreneurs. 

State Sen. Julia Coleman, R-Waconia, represents District 48, which includes eastern Carver County.

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