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

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  •  your definition of risk is faulty (2+ / 0-)
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    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-)
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        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

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