Business Lending in the Year 2011

Right now banks are selling of massive amounts of debt at near fire sale prices making this a good time to purchase that debt. The government is selling back shares they bought from banks, making it, as always a good time to be a banker. What about those looking to borrow money from those same banks? Business lending in 2011 is still hard and credit markets while looser than two years ago have a long way to go.

There are plenty of business getting financed this year though, many of those businesses aren't being financed by banks. Much of the commercial financing that is being acquired at present is actually coming from financial institutions that while they have bank capabilities, are not technically banks in that they don't have depositors. These sources will in the year 2011 and probably for the next decade be the source of commercial financing to businesses that don't have the best credit, the safest business model or a long term relationship of lending with a bank.

In the year 2011, lending is likely to built on a more solid foundation of collateral and therefore will be safer for the banks, lenders and future borrowers looking to acquire capital. The premise of future business lending projects will likely be built on this discipline.

Why are lending institutions that are not banks often able to lend when banks will not? These institutions don't carry the same burdens and liabilities banks do. The operate out of self interest only and do not have to maintain any responsibility to depositors.

Ideally most would rather get their financing through a bank than through an institution that merely lends the money their investors control. When banks are at their best and the your credit is as well, this is likely the ideal way to access commercial financing. At present, this is not the case and these lending institutions have to take the place of banks.