Why Community Banks Should Lend to Small Businesses
By Herman L. Jimerson
Due to the scare brought on by the near collapse of the banking industry from the real estate sub-prime lending scams, many small businesses are gasping for air to survive. Despite President Obama’s pleas to the major banks to open up the lending to small businesses, his call to action on this economic crisis has been virtually been unheard by the major institutions. This is particularly alarming because the very same banks that the American public bailed out are refusing to invest in the biggest sources of jobs for America. Small businesses make up the majority of the American workforce. These businesses because of the economic crisis are going through every imaginable obstacle to survive. Many have stop providing health insurance for their employees, issued the lowest pay increase in over twenty years, and been force to let some of their employees go. Strangely enough the major banks (who took the bailout money) are reporting record profits, and giving mind boggling bonus commissions to the very people that allowed the near bank failure to happen. Are we facing what Charles Dickens wrote in his “Tale of Two Cities”? Is it Wall Street that is having a great party, while Main Street sounds of deafening quiet becoming reality for America? Has the Babylonian beast called the Mega Corporation slouched its way toward our country to be born? Perhaps, but there are still things we can and must do.
The community banks or local bank must take back their interest in the American communities. These banks have always profited and thrived by making worthwhile investments in small businesses. There can be nothing greater in creating a win-win-win situation. The bank wins, the small businesses grow, and the community thrives. The federal government should do its part as well. Economic incentives should be given to these community banks for making loans to small businesses. It could be a tax incentive, a buy back incentive if the business fails, or a myriad of combinations to make the lending and growth economically feasible. What hasn’t work, at least to the common man’s benefit, is the bailout of Wall Street. Now let’s try a change of strategy and lend (Not give like you did to Wall Street) to Main Street. It’s in the Country’s best interest, and a strong shot for economic recovery. The Community banks fear is that the larger banks won’t lend to them because of potentially riskier loans to individuals. Again Congress can cure this with incentives, and make the process a good one. I applaud the President’s plea to the banks to lend to the small businesses. I pray the slumbering beast will be halted. It must!
Filed under: Financial, Home Foreclosures, Uncategorized
