Small Business Loans without Banks Updates
The idea of obtaining small business loans without using banks is not a new strategy, but it has become more relevant because of increasing commercial financing problems for small businesses when attempting to obtain bank financing.
Wanting to find commercial loans without involving banks must certainly be an outgrowth of how unpopular banks have become in the current distressed economy. Thomas Jefferson is credited as the source of an early observation that seems to be more relevant than ever today ("Banking establishments are more dangerous than standing armies"), especially when viewed in combination with reeling economic conditions. In the contemporary setting, banks have undergone many structural changes that have nurtured a desire to leave bank relationships on hold.
Just as General Motors and Chrysler are now a shell of what they were just a few years ago, banks have also changed irreversibly. Despite fond memories of how banks operated in an earlier time, they have rapidly progressed to a mechanical and cold operation that is not likely to be appealing for either individual or business customers. Foreclosure notices and exorbitant credit card fees have become the contemporary bank images to replace one of giving away toasters.
Inadequate external controls do seem to be a problem when banks are allowed to mismanage financial derivatives, and this has turned out to be an ideal illustration of banking in its darkest hour. While it is apparent that many politicians and bankers feel that the public does not deserve to ever know the real truth, more experts have come forward to talk about what a close call it really was (and most of these individuals also emphasize that we are not out of the woods yet). Perhaps Thomas Jefferson really did know what he was talking about when he observed how dangerous banks can be.
While there are more examples than we have room to talk about in a short article such as this, small business owners usually have two major reasons to avoid banks for their business loans. One is looking backward at how banks have performed and deciding that they deserve better. As one example, most commercial borrowers are aware that bailouts funded by taxpayers have not resulted in a normal level of business financing options.
Another sound rationale for avoiding bank financing is purely logical and based on the fact that so many banks have failed and gone out of business. Related to the enhanced bank failure rate is the lack of availability for routine business loans at banks still operating. Small business owners have already realized that they must find alternative small business financing when their bank is not up to the task.
By pitting a "good" lender against the "bad" banks, lenders inspired by a good cop versus bad cop mentality have realized that offering small business loan options without banks can be a marketing success. "Thinking outside the bank" has become a battle cry for some lenders in their efforts to dramatize a new bank-less approach to business financing options. Small businesses should not let the advertising hype get in the way, and the point that deserves particular emphasis is that no matter whether they obtain financial help from a bank or not, very few businesses can survive for long without adequate commercial loans.
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ABOUT THE AUTHOR
Stephen Bush is an experienced business bank consultant and has written extensively about how to find practical solutions for small business finance difficulties. To learn more about his current recommendations for commercial loans, small businesses should contact Steve at AEX Commercial Financing Group to receive a straightforward review of realistic working capital and commercial mortgage loan options.