Latest Bank Failures Sure to Be Forgiven

After decades of marginalizing the small business owner and gutting the concept of a local business banker the lending industry has once again displayed their incompetence in trying to administer CARE Act funds.

A generation ago, businesses large and small had a relationship with a banker that worked in their community. These bankers grew in lock step with their clients. Over time they knew their clients’ businesses intimately and when disaster struck, they could more accurately assess risk and provide their clients with appropriate options. At some point, the powers that be in the banking world decided that this wasn’t an optimal revenue stream. After all, it took many years to develop a book of business and many small businesses fail. So rather than invest in this aspect of the economy, lenders large and small started eliminating products and services available to small businesses. Try finding a line of credit for a small business. Not approval. Try finding a bank that offers them.

So, here we are now, in the throes of chaos, hundreds of thousands of small businesses trying to avail themselves of programs established for their benefit by the CARE Act. All these business owners calling and emailing their banks and filling out online forms only to hear nothing back. The reason? Banks don’t have these people in place. They never imagined a scenario where small business owners could make it worth their time. So, instead of cultivating business bankers they focused on anything and everything else.

The headlines will tell a different story, bankers patiently waiting to spring into action as the government bumbles its way through the process. No stories about the shortage of knowledgeable business bankers. No stories about the missed opportunity. No stories about how decades of policy decisions in the banking world will add insult to the already enormous injury brought to our world by the COVID-19 epidemic. No, when all is said and done, the banks will make 1%-5% on every CARE Act loan they haphazardly administer and when all is forgotten, sometime long from now, they will throw their small business banker hats back in the closet and will all go back to business as usual. Big Business.