small business loand and the bottom of the ocean

For most small business owners, the current ineffective process for obtaining small business loans and commercial mortgages has become frustrating and confusing. Normally reliable banks and bankers have suddenly become undependable and non-responsive to the practical needs of commercial borrowers. For most observers, it is remarkable to see how differently the public is suddenly treating the banking industry. To update a Ronald Reagan quote about government solving problems, the current perspective might be "Banks are not the solution to our problem, they ARE the problem."

Most of the negative public perception (so far) is directed at the larger banks which collectively have already absorbed hundreds of billions of dollars in federal bailout payments and loan guarantees. Even bank employees seem to feel this way. When a woman working for one of these banks lost her job in New York recently, she quickly described her relief at not having to tell people that she worked for the bank anymore.

It does appear that bankers have become the new lawyers in terms of public ridicule and anger directed toward them. 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. One effective strategy for improving their public standing would be for the good bankers to be candid in their public criticism of the bad bankers. It seems increasingly clear that some banks and bankers have acted irresponsibly for many years. One of the best sources to judge and correct this misbehavior is likely to be other bankers. It will be refreshing to see the truly innocent bystanders in the banking community speak out publicly about those who caused the economy to implode in the first place.

Not to be overlooked in all of this is the practical need for commercial borrowers to find reliable sources for small business loans, working capital financing and commercial mortgages. This will be more difficult than it might initially appear for several reasons.

First, many small business owners have probably been accustomed to dealing with the same bank and banker for many years. There are issues of friendship and loyalty that could cause some businesses to delay longer than they should in replacing their bank.

Second, even after a commercial borrower decides that a change is necessary, it will not be an easy matter to find an effective source for business finance services. 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, it will require time for business owners to adjust to the fact that some of the best sources for traditional working capital financing are not banks at all. For commercial financing services such as business cash advance programs, banks have played a smaller and smaller role even before the recent economic volatility.

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