U.S. banks are experiencing highs, but not good ones. Not only did U.S. banks see a massive decline in lending -- an all-time high in 67 years, but also in the number of banks that failed. According to FDIC, 702 banks have failed in 16 years with 140 of those in 2009 alone. FDIC believes that more banks will fail in 2010.
FDIC started collecting past due loan data 26 years ago and saw another record: 5 percent of all loans are three months past due. U.S. banks don't expect to see improvement soon.
Congress wants to see banks to lend more especially when the financial sector received billions in taxpayer assistance. Yet, bankers face a double-edged sword because struggling business aren't demanding loans.
However, there are businesses applying for loans and banks rejecting them. One home health care franchise said it could grow business if it could get a loan. The bank rejected the loan, and the president re-applied only because the same bank claimed it would increase its small business loans and extend credit to thousands of more businesses.
The president said the re-application project was no different than the original loan request. The bank suggested he pursue a loan from the Small Business Administration.
What is the cause of the declines in loans? It could be due to stricter lending standards, fear of lending, fewer demands for loans or banks cutting the number of loans they give. Banks also say that they don't see very many borrowers with a healthy credit. Too many businesses need cash, but they haven't figured out how they'll pay it back.
Again, businesses need to look beyond banks for loans. Banks must follow rules and regulations that private lenders are exempt. Of course, private lenders don't just lend money or provide invoice financing to anyone. Lenders still look at each business before deciding whether to provide a loan or line of credit. Private lenders have the ability to look at things in a business that banks can't.

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