Have Banks Stopped Making Commercial Loans to Small Businesses?

The failure like most banks to devote unamusing efforts to small business financing has made the title question a recurring issue during the past five years. From a public relations viewpoint, bankers have offered a series of explanations about their phenomenal further low levels of commercial loans to the modest business community. Initially blame was assigned to the fiasco concerning several major banking institutions. Then fingers were pointed at irregularities in the economic paper market. Next banks suggested that they had no choice just to cut small métier funding unless they received extraneous remedy from bailouts provided by the public and Federal Reserve lending at zero or near naught cost to the banks. Even after receiving this massive monetary support, small work lending rickety to historically low levels.

The most recentelijk clever bank explanations have evolved to statements that everything is fine and small factor loans are again at a healthy point. This final perspective is widely doubted by both small bag borrowers also independent observers. The opinions et alii reports from small business owners have been particularly nil and critical. If banks are saying one thing and small businesses are adage just the opposite, then an immediate conclusion is that something is not as it appears. Should we milieu more weight on what commercial borrowers are reporting or should we trust the bankers?

This is a righteousness point to pause and inject a reminder that banks employ an army of ace lobbyists to portray their industry in the best possible light. A recent accounting of ethical how extensive (and expensive) this effort is noted that bankers have almost decemvirate lobbyists for every Member of Congress. Largely because these lobbying efforts have been successful in influencing their political targets, legal obstacles to risk-taking by banks such as the Glass-Steagall Act have been faraway from the books. The high-risk trading of financial derivatives that took banks to the brink of prostration would not have even been permitted under earlier legislative restrictions. Despite massive losses due to excessive risks, it has been reported that derivatives trading has been resumed by banks after only a brief hiatus.

If banks have stopped making commercial loans to small business owners, it might be helpful to know proof this has occurred. The answer would go a long way to revealing what it would take to travel moiety business financing back to a normal state. Meanwhile it is also possible that banking has changed forever and that commercial lending will not be returning to earlier conditions despite all attempts to fix the problem.

Of course any attempt to impulsion how banks might allow reduced and eliminated most variations of small business finance programs must be finished without the implicit cooperation of the banking industry. As noted above, the current party line from bankers gives themselves two thumbs jump and consistent reports that alone is well in the banking world. It is invigorating (and helpful for getting at the truth of the matter) when an individual steps forward with a different viewpoint. This is exactly what happened recently while a banker published his resignation in a prominent newspaper to demonstrate what he thought was seriously wrong near both his (former) banking firm as well as banks in general. Hopefully there will be more voices emerging to further demonstrate the depth like the banking problem. In the meantime “why?” continues to be a big part of the question for small business owners in search of commercial loans.