Bank lending is the primary source of financing for many small businesses. If you operate an established small business and are having difficulty renewing your credit line, forget for one moment your bank’s force majeure that the problem extending adequate capital to you is reflective of your business practices. As a small business owner having survived the recession of the past year and a half, you generally know whether or not your credit is good enough, or if your sales are strong enough, or if your cash flow and assets are deep enough to continue the good fight to seek additional financing.
Generally speaking, small business owners prefer community banks to transact business. There is a common myth that supporting the community banks helps keep money in the local economy. And while there is something special about conducting business on a first name basis with your banker, the reality is many smaller banks are standing on weak foundations due to unsafe or unsound banking practices. If the time has arrived for you to assess whether your lender has become a stumbling block to your future financial success, where can you go to find out more information before making the decision to change banks?
Through trial and error, I discovered the information is readily available one click away on the Federal Deposit Insurance Corporation (“FDIC“) website. The FDIC is an independent agency created by Congress to maintain stability and public confidence in the nation’s financial system.
The FDIC maintains a current list of failed banks and gives instructions to account holders and vendors affected by bank closings. If your bank has not been closed and is still operating, search the FDIC website for Enforcement Decisions and Orders issued to your bank specifying any wrong doing and corrective actions that the bank is ordered to comply. Then prepare yourself – it is within the details of these orders you may find the real reason your loan request has not been approved, but at least you will have objective information if you decide to shop for a new lender.