Small Business Financing
To assist in explaining what is wrong with small business financing and at the same time provide a healthy prognosis for impacted businesses, there are several reasons included below why intensive care comparisons might be appropriate.
During the past two years, banks have lost much credibility and good will. Until the federal government provided massive bailouts for many of them, most of these lenders were on life support themselves. Some banks are effectively still in the intensive care process while others have recovered satisfactorily. Working capital financing for most small businesses is predominantly in what appears to be long-term intensive care, whether we are reviewing the healthy banks or ones still recovering. Banks are generally reducing or eliminating a large portion of their business financing activities, as indicated from most ongoing public and private reports. For example, with little or no advance notice, most banks appear to be closing commercial line of credit programs for small businesses regardless of profitability or length of the lending relationship. This is apparently not a temporary move to the sidelines but rather a permanent reallocation of resources to more profitable activities based on the manner in which this is being accomplished.
During the past two years, banks have lost much credibility and good will. Until the federal government provided massive bailouts for many of them, most of these lenders were on life support themselves. Some banks are effectively still in the intensive care process while others have recovered satisfactorily. Working capital financing for most small businesses is predominantly in what appears to be long-term intensive care, whether we are reviewing the healthy banks or ones still recovering. Banks are generally reducing or eliminating a large portion of their business financing activities, as indicated from most ongoing public and private reports. For example, with little or no advance notice, most banks appear to be closing commercial line of credit programs for small businesses regardless of profitability or length of the lending relationship. This is apparently not a temporary move to the sidelines but rather a permanent reallocation of resources to more profitable activities based on the manner in which this is being accomplished.
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