Thinking Outside the Bank for Business Loans Update

By: Patricia Warren

A clever approach to marketing the concept of business loans without banks is generally built upon a variation of the good cop and bad cop by merely comparing a "good" lender to the "bad" 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. As one example, most commercial borrowers are aware that bailouts funded by taxpayers have not resulted in a normal level of small business financing.

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. Meanwhile, routine small business loans are not available from the remaining banks on a reliable basis. If their bank is not up to the fairly normal task of offering business financing to them when they need it, a prudent borrower must be prepared to take their business elsewhere.

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 dramatic bank changes seen during the past ten years or so have simply served as a renewed inspiration to forego banker relationships whenever possible.

Banks have changed just as significantly as Chrysler and General Motors, although bankruptcy was not an option for the banks due to legal and governmental restrictions. It is hard to find anyone who talks fondly of the cold and mechanical approach adopted by banks other than to reminisce about memories of warmer and friendlier banks in bygone days. Foreclosure notices and exorbitant credit card fees have become the contemporary bank images to replace one of giving away toasters.

But there can be an even darker side to how banks can operate when there are not adequate controls governing their financial transactions as evidenced by the problems created by derivatives trading. 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.

Article Source: http://yourfinance.co.za

About The Author
Stephen Bush and AEX Commercial Financing Group are an expert source of merchant cash advances - Stephen has offered working capital and small business financing for 30 years