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It is appropriate to review what the "new normal" looks like so that small business owners will be prepared to cope with the challenges they now face with commercial lenders as a result of business financing options changing significantly during the past year or so. Commercial borrowers will need to accept the fact that a "new normal" way of doing things has emerged in order to be successful in obtaining new commercial financing despite major changes occur with small business finance programs. The dramatic reduction in the number of commercial lenders that are actively making small business loans is one of the most significant changes in the business finance lending environment. An equally important part of the "new normal" is that many banks continue to state that they are still providing small business financing when in reality they have reduced or eliminated their commercial lending programs. A recent report indicated that commercial lending activity fell by the biggest amount since records have been kept. This problem seems likely to get worse before it gets better because based on Federal Deposit Insurance Corporation accounting, almost one out of every ten banks is close to collapse. The shaky current financial condition of many banks is further documented by reports from the Federal Reserve and United States Treasury Department that over 50 banks did not have sufficient cash flow to make their November 2009 payments for loans made by the Troubled Asset Relief Program (TARP). Twelve banks have missed three consecutive quarterly payments. Presumably the government is not treating the delinquent banks like most banks have treated individual consumers who have missed one or more credit card payments (with interest rates being tripled or quadrupled). Far too many banks have regularly acted like they have a monopoly on their business financing services. The "new normal" for small business owners should increasingly reflect the growing realization that banks can be replaced when they stop providing an adequate level of service to their business customers. As a direct result of the continuing shortcomings of banks in providing an adequate amount of small business financing help as noted above, for most business borrowers the "new normal" will involve a new bank or at least a new commercial lender (which might not be a bank at all). While banks would like their small business owner clients to keep believing that only a bank like them can help commercial borrowers, this is truly a hope created by the banks themselves. Numerous banks have indicated that they will no longer continue to provide financing for many essential commercial finance services such as commercial mortgages. Banks only rarely provide a realistic and cost-effective option for specialized business finance services such as business consulting, working capital management and merchant cash advances. For business owners which have commercial loans or working capital financing due to be refinanced within the next three years, planning ahead will be increasingly important to the success of their small business financing. With the "new normal", the timing for business borrowers is not likely to be as smooth for commercial refinancing once the bank decides to pull the plug on their small business finance services.
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