One clever approach to marketing the concept of business loan services 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. To ensure that the main point (avoiding banks) is not overlooked, some lenders are using business financing options slogans like “Think outside the bank”. Whether or not the advertising approach is convincing to small business owners, the ability to obtain commercial loans without bank involvement can help small businesses to prosper both with and without banks. While banks still prefer not to talk openly about derivatives trading, this has provided insights into how banks might mismanage financial oversight when external controls prove to be inadequate. 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. Because of specific legal restrictions, banks cannot file for bankruptcy in the way that General Motors did but banks have still changed just as dramatically as if they had. Except in paid advertising, it has become 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 The stories about giving toasters away have unfortunately been replaced by foreclosure and credit card abuses. The idea of eliminating banks as a source of commercial loans has its roots in the increasing unpopularity of banks. As reflected in a quote attributed to Thomas Jefferson (“Banking establishments are more dangerous than standing armies”), bankers and banks have been unpopular from the very beginning of American history. Small businesses generally have two major inspirations for avoiding banks when arranging business loan services. First, 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. Meanwhile, routine business loan services are not available from the remaining banks on a reliable basis. In the end small business owners have to judge whether their current bank is up to the task and then find alternative options for small business financing quickly when they are not. Second is the common occurrence of disliking banks because of prior problems and mistreatment, and there are more accounts of similar difficulties reported everyday. In particular small business owners can point to small business financing services being reduced and eliminated by banks even though they were bailed out by taxpayers so that this kind of financial activity could resume at normal levels. Business loans without banks is not a new idea. There are prominent examples with recommendations to pursue business finance options that do not involve bank financing starting three to five years ago. The initial reasons for this business financing options advice still exist, and now there are additional major factors that have entered the picture. While the original thinking could be described as “this is something that most small business owners should consider”, the updated summary is “sooner or later, all business owners will need to do this”.
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