Small Business Finance – Next Big Banking Problem?

Over the past year, most banks and lenders have been subject to the results of negative disaster operations and publicity. The actual commercial loan activities reported by the bank contrary to the usual efforts by politicians and bankers to describe banks as normal and healthy. Most of the financial results of the bank have disappointed after working hard to resolve the problem of massive housing loans. It is reasonable to ask whether commercial banking has more potential disasters to appear based on what has been seen and reported so far.

Based on a number of business financing statistics, commercial loans to small businesses are already in life support. In many cases, without bailouts, many commercial banks will fail. Such as a perspective might be heard, this report will provide a more negative prospect for the future of a small business financial program. Unfortunately for banks and lenders, it seems that business loans will be the next big problem.

Over the past year, several banking problems have received significant publicity. Difficulties that are largely avoided are primarily related to the increase in the foreclosure of houses which in turn cause various investments to be bound to home loans to reduce value. The investment loses the value so fast that they are known as toxic assets. When the bank stops producing many loans (including small business financing), the federal government provides bailout funds to many banks to enable them to remain operating. While most observers will argue that the bailout is made with implicit understanding that bank loans will continue in a normal way, banks seem to hoard this taxpayer fund for rainy days. With almost all objective standards, commercial loan activities have all the small business finances abandoned.

Small business financing seems to have looked like the next big problem based on commercial financial statistics recently released by many banks. The general decline in commercial real estate value over the past few years is the main factor in this conclusion. Because many large commercial real estate owners cannot make their commercial mortgage loans or debt financing business, this has produced several significant bankruptcy. The resulting bank losses clearly affect the current commercial loan to small business owners even though these difficulties mainly occur with large real estate owners and usually do not involve small businesses.

Bank losses on large commercial real estate loans have caused many banks to reduce or stop their small business financing activities, and this has similarities with the previous situation of housing mortgage loan assets that cause banks to stop normal loans due to lack of capital. Bank losses from large commercial property investors produce ripple effects that have led to small business financing to disappear effectively until further notice. While small business owners do not cause this problem, they suffer from direct consequences when the bank cannot or does not want to provide a normal commercial financing rate to them. This bad situation is made worse when we know that many banks hoard cash and approve fewer commercial loans to allow them to pay bailout funds quickly return to the federal government. The main logic for this approach is to allow banks to continue bonuses and excessive compensation to their executives.

Unfortunately one problem will lead to another, just like a complex state. Failure to get normal business financing is likely to lead to an increase in the number of commercial commercial defaults by small businesses. Wise business owners must start taking action now on time to avoid such negative consequences. The most serious small business financial problems can be anticipated

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