Look, banks are not inherently evil. They’re mostly run by people trying to do the right thing, and it’s undeniable that bank loans have helped out many people and many businesses over the decades.
I say that because I’m going to make a point that might strike some as a little harsh. Right now, you should avoid bank lending like the plague. There’s multiple reasons for this, but it boils down to a few simple ones.
Independent lenders are simply more nimble, more quick and more willing to lend right now than banks. I recognize the fact that I work for Direct Capital might cast a shadow on that, but I’m not alone in saying this.
Reasons Why You Should Avoid Banks
- Regulatory concerns. Banks are fighting new regulations that they say will curb credit availability further. Given the already lackluster lending environment for banks, this is a giant, flashing CAUTION sign.
- The speed. Banks simply can’t approve you for financing without making you jump through more hoops than a Corgi at Westminster. Independent lenders are quicker on the draw and require less paperwork.
- The reluctance. The fact that bank lending remains exceptionally low in 2012, a couple of years after the official end of the recession and during a time of slow but steady economic improvement, is another example of that big ol’ sign lighting up.
- The combination of all three. Do you really want to have to go to a bank to go through a multi-week approval process, have the loan you do get be subject to significant restrictions or not get a loan altogether? If your answer is yes, I’m afraid for your sanity.
So that’s the long and short of it. Until the banks’ ability and willingness to lend improves, you’ll want to steer clear of them in all but the most dire circumstances. Instead, look into an independent lender or start saving for your equipment loan and other lending needs. You’ll be awfully glad you did.
Where do you turn for lending?
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