I have a contract sitting around somewhere for a home equity loan with Gem Savings from around 1990. It was one page, letter sized, in large type- and was all I needed to sign to get an equity loan on my house.
Now that document would run 8 pages of micro-type and include things like an arbitration clause, denying me the right to use the justice system to settle any grievances.
Later I signed one of those really long contracts to refinance my house with a bank. They changed the terms at the last minute, after jerking me around for weeks. Then, promptly sold the loan off to some mortgage servicing company, and then it’s been transferred time and time again- all without proper recording of title and lien transfer at the County Building.
If you or I sold a property and didn’t record the transaction, it wouldn’t be considered valid.
My small business, a sole proprietorship, recently teamed with another small business to do a large deal- $130,000, with a very small margin. When I went to deposit $90K, they wanted to hold my money for a week- despite being told well in advance this deal was coming. The banker even tried to warn me that this could be fraud. I had promised the vendor I’d pay by wire transfer- and was told by the bank it’d be $25 to wire money out. They didn’t tell me there was a $13 fee to have it wired into my account.
I’ve even had them putting holds on rent checks that are certified. Apparently, “Certified checks are easy to forge” which is why the hold according to my bank. WTF good is a certified check then? I do work for a credit union- which pays with certified checks- even those get a hold.
It’s getting harder and harder to run a small business, and banks behaving badly is just one more obstacle for small business to overcome. When I was a youngster in business school, you were advised to have counsel of a lawyer, accountant and a banker. Since the deregulation/consolidation of banking in this country, I’d say you’d be hard pressed to find any banker with actual lending authority anymore.
The last one I encountered was at Eaton National Bank- which once it got absorbed by LCNB ceased to be what it was. I’m experimenting with Wright Patt Credit Union now- which is one of the few credit unions that can do business lending. It’s becoming apparent that small business really is better off with a credit union instead of a bank, but I’m not sure if this applies to start-ups (I’ve been in business for 25 years).
One of the problems is that small business can’t buy the politicians’ ears the way big business can. When was the last time you heard of a tax break for small businesses? A program to help small businesses grow- that wasn’t driven by big business financial tricks (like quick write-offs of capital expenses)?
What could change if small businesses were given tax credits rewarding them for each full-time employee, length of employment, and growth in payroll that were redeemable for low-interest loans and access to working capital? What incentives could we offer to encourage the big banks to take small business seriously?
Small business powers most of our job growth, but, there are no small banks left to work with them. It’s time to solve this problem.