Small Business Loans and the Bottom of the Ocean

After reviewing the current sorry state of obtaining a small business loan, most would conclude that normally reliable bankers and banks have become non-responsive and ineffective when dealing with commercial borrowers. For small business owners, the current process for obtaining commercial loans and commercial mortgage loans has become confusing and frustrating. It has become so bad in most places that it would be appropriate to update the standard Ronald Reagan quote about government solving problems to something like “Banks are not the solution to our problem, they ARE the problem.” In any case, it is remarkable to see how the public is now viewing the banking industry in a totally different light.The banks which have already received hundreds of billions of dollars in federal bailout loan guarantees are currently the primary target of public scorn. Even bank employees seem to feel this way. A person who was recently employed at one of these banks lost their job and did not hesitate to describe the relief because they no longer worked for this particular bank.Bankers might have become the new lawyers in terms of public anger and ridicule. There was a joke making the rounds a few years ago about lawyers that has been modified to include a reference to bankers. What do you call 10 lawyers on the bottom of the ocean? (A good start.) Substituting “bankers” for “lawyers” will readily provide a contemporary cultural reference about how far bankers have fallen in the public eye.The many good bankers who have done absolutely nothing to deserve this ridicule have their work cut out for them to restore a tarnished image. If the good bankers can be more candid in their public criticism of the bad bankers, this is likely to be an effective strategy for improving their public image. It seems increasingly clear that some banks and bankers have acted irresponsibly for many years. Other bankers are likely to be one of the best sources to correct and evaluate this misbehavior. Seeing the innocent bystanders in the banking community speak out publicly about those who caused the economy to implode will be both helpful and refreshing.The practical need for commercial borrowers to find reliable sources for working capital financing, small business loans and commercial mortgage loans cannot be overlooked when evaluating the growing public criticism of banks. For several reasons this process could be more difficult than it first appears.First, many business borrowers could have been working with the same banker and bank for a long time. Some businesses might delay longer than they should in firing their bank because of loyalty and friendship issues.Second, it will not be an easy matter to find an effective source for business finance services even after a commercial borrower decides that a change is necessary. In most cases, it will be prudent for business owners to look beyond their local area in the search for better providers of commercial finance funding.Third, adjusting to the fact that some of the most effective sources for working capital funding are not banks at all will take time for some business owners. Banks were playing a minor role even before recent economic volatility for a number of commercial financing services such as business cash advance programs.