Skip to main content

View Diary: Big Banks have abandoned small businesses (78 comments)

Comment Preferences

  •  your definition of risk is faulty (2+ / 0-)
    Recommended by:
    BYw, Actbriniel

    the size of the loan requested and the size of the company and its books etc should determine risk and not simply size

    •  Well all of that goes into a bank's risk assessmen (0+ / 0-)

      t of a loan. But small businesses tend to be much more prone to both systemic and unique risk than larger corporations.

      By the way, my definition of risk is "distribution around a mean." There are a number of ways that can be applied, though.

      The obvious answers are wrong. That's why we aren't doing them already.

      by atheistben on Thu Nov 17, 2011 at 03:16:43 PM PST

      [ Parent ]

      •  I thinik you need to be precise here (0+ / 0-)

        (a) Startups under 10 years are more prone to failure. That number is very high, but you would still have to look at the actual business. Or , at least you should.

        (b) Businesses with worth or revenues of several million dollars are also being denied rather than small start ups.  This is a range at which the risk would be extremely small. If a company is worth say under 10 but over 3 or some number like that. The idea that a company that's been in business for years, has good revenue and good finances and they are still not lending to them is a problem. THere's no way to slice that. Especially when you realize that in fact they do give lines of credit and loans to large corporations with bad or not so great financing situations

    •  Also - SBA loans are guaranteed. If they are not (0+ / 0-)

      paid back the bank is stop-lossed by the SBA.  In addition, true small business loans are generally also backed by a personal guarantee on the part of the owner which includes personal responsibility for the loan and generally collateralized with the owner's house.  I would posit these loans are generally lower risk than the average TBTF portfolio of late.

      Occupy is not fighting for the rights of a few to sleep outdoors, but for the right of millions to sleep indoors. (VanJones - I think from a tweet).

      by Actbriniel on Fri Nov 18, 2011 at 05:35:06 AM PST

      [ Parent ]

      •  they are definitely at lower risk (1+ / 0-)
        Recommended by:
        Actbriniel

        on any given loan considering size of these loans causing any real loss compared to the size of losses tat are sustained with big corporations

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site