Commercial Loan Lenders and the Bottom of the Ocean

It is surprising to most observers to see how commercial borrowers needing help with small business loans are now viewing banks and bankers in a totally different light than they were just a few months ago. Because of the sudden change in public perception, it is appropriate to consider revising a famous quote by Ronald Reagan about government solving problems to say "Banks are not the solution to our problem, they ARE the problem." For business owners, the current process for obtaining commercial mortgages and other commercial financing has become a quagmire of frustration and confusion. After reviewing the maze of difficulties involved in the process for refinancing or acquiring new commercial loans, most business borrowers have concluded that the overall banking industry has become ineffective in providing even routine business finance services.

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. This will be more difficult than it might initially appear for several reasons.

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, 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, 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. For commercial financing services such as business cash advance programs, banks have played a smaller and smaller role even before the recent economic volatility.