Local Bank Seized – What About That Commercial Loan I Need?

When I first started my business in the early 1980s, all the Small Business Administration (SBA) pamphlets and all the SCORE Counselor advice reminded entrepreneurs and small business people to develop a relationship with your local bank. Indeed, this is advice they had been giving out since the 1930s, but something changed after that and by the early 90s.It no longer mattered if you had a relationship with your local bank, because many of the local banks were being bought up and consolidated into larger banks like Wells Fargo, and Bank of America. Even if you had a really strong relationship with your local bank, all this suddenly all those years and your relationship disappeared in an instant if it is that bank sold out to a larger bank.Basically, they transferred the accounts and all you were was a mere number. It made things very difficult to get additional monies needed to expand business operations, and that’s just a kind of the way it went. During the recession in the early 90s, most small businesses were forced to expand at a cash flow, and there wasn’t a whole lot of cash while out there for anybody; thus, not a lot of expansion, rather stagnation.Today, we see a similar thing happening, with many local banks being seized, the Fed comes in after banking hours on Friday and closes the bank, and announces it in the newspaper. All the depositors have to go to a different bank or contact the FDIC to get their money. Even if your bank is not seized many local banks fear that they might be and therefore they don’t dare make local commercial loans because they need their deposits/outstanding loan ratios in the correct spot. These are serious times, and it is making it very difficult for small business owners to get commercial loans.