Thinking Outside The Bank For Business Loans Update

Lenders themselves learned some time ago that there is a substantial promotional benefit when pitting themselves against banks, and this has become a primary marketing strategy for business loans without banks. Some lending sources have even adopted a variation of the slogan "Thinking outside the bank" to emphasize the potential advantages of business financing without involving a bank. In addition to the commercial advertising enticing commercial borrowers to leave their banker behind, this article illustrates why there can be a compelling business necessity to successfully obtain commercial loans without involving banks.

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. This is illustrated in part by the ongoing failure of banks to provide small business financing despite receiving taxpayer-funded bailouts designed expressly for banks to continue normal business lending.

For a second example, banks are failing at a rate that alarms most observers so logic dictates that small businesses should not book passage on a ship that is about to sink. This concern is compounded when small business owners realize that very few of the still operational banks are consistently providing small business loans. Small business owners have already realized that they must find alternative business financing options when their bank is not up to the task.

Wanting to find commercial loans without involving banks must certainly be an outgrowth of how unpopular banks have become in the current distressed economy. From the early origins of American history banks and bankers have proven to be unpopular, and Thomas Jefferson is one who had similar feelings when he said that "banking establishments are more dangerous than standing armies". The newest element in the desire to escape banking relationships is probably tied to the massive changes seen during the past ten to fifteen years.

Just as General Motors and Chrysler are now a shell of what they were just a few years ago, banks have also changed irreversibly. Except in paid advertising, it has become even more rare for either businesses or individuals to speak positively about their bank, but many of us still have warm feelings about earlier banking days. The stories about giving toasters away have unfortunately been replaced by foreclosure and credit card abuses.

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. It has become more clear with each emerging report that a total financial disaster was only narrowly averted after banks were caught using an absurd amount of leverage with securities that they did not understand sufficiently. Maybe this kind of behavior does more than anything else possibly could to prove the accuracy of the earlier Thomas Jefferson observation.

By: S.A. Bush

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Stephen Bush and AEX Commercial Financing Group are an expert source of working capital advances - Stephen has offered working capital and business financing options for 25 years