Where did the banks go?

I read Shoe Dog, Phil Knights‘ memoir on how and why he built Nike quite a while ago but always recommend it. Those were the days when the only way to raise capital to grow your business was the local bank.

Remember when banks supported the local business community with bank loans. You would come in, take a seat, shake the banker’s hand, chit-chat, fill in the blanks of the loan and off you would go. Now it appears that the only thing the local bank does it set up accounts, give credit cards, get cash and deposit cash and on occasion has a notary on hand. When did all of that change?

Banks got into better businesses with large loans. Higher risk, higher reward. Mom and Pop just were not great bets anymore. So where do people go who have solid businesses that support their family and the 10 people or more that work in the office? What happens when the owner clearly needs a loan to get to the next level because the opportunity is there?

I get a few decks like that a week. I try to give some advice on where to possibly find some capital such as your own customers, people under your tent. Our economy was built on small family businesses. How and who will continue to support their needs for capital to grow?

Our Government does give small business loans but for that, they take your house as collateral. How can that possibly make any sense for anyone? So, is this an opportunity for more community banks to return?