The Official Blog of the SBA 504 Experts

504 Loan Blog

The Beauty of Niching
  • more-shares
    • Save on Delicious

I’ve been telling a LOT of media outlets lately that the Big Banks became all-things-to-all-people generalists, when specialization is the primary route to success in today’s fast-paced, high-tech world. Becoming “jacks of all trades, masters of none” ultimately doomed the Big Banks, even while some of these same people laughed at our singular focus when we first launched MCC. We wanted to (and do) provide wealth-creation through commercial property ownership, in the smartest way possible, only to business owners and entrepreneurs. So many of these supposed “best and brightest” bankers thought we were too narrowly-niched in our focus. So many thought we’d fail because our specialty of providing a government-guaranteed loan program was just asking for trouble (a loan program, by the way, that provides the lowest financing rate available for small business owners…this month, it is at an all-time low of 5.25% fixed for 20 years on nearly half the commercial loan amounts that increase our borrowers’ net worths…just try to get that at an ordinary bank!).

Ah…those were the days. I’d say, “Look who’s laughing now,” but there have been simply too many people hurt by the incompetence of these corporate “bigwigs” to make light of it now. It IS a bit ironic that here we stand with a 2008 net income greater than the combined profits of: Bear Stearns; Lehman Bros; National City; Regions Bank; Wachovia; Washington Mutual; Morgan Stanley Trust; Citibank; Colonial Bank; Fifth-Third Bank; Royal Bank of Scotland; UBS; and AIG.

And yes, we’re raising capital right now, as you may know, but unlike they are, we’re NOT doing it to shore-up our balance sheet for past mistakes and poor judgments. We’re raising it to take advantage of the numerous opportunities that are all around us — we’ve hired five new employees in the past six weeks alone, with more being interviewed as I type this. The small guy is now becoming the predator. David is picking up more rocks.

I would be disingenuous with you if I didn’t also explain that we’re raising capital because, despite prominent economists like Paul Romer (husband of the President’s Council of Economic Advisors Chairwoman, Christina Romer, who is also credited with co-authoring the ARRA) suggesting we need “good banks” to counter-balance the “bad banks” our government is presumably creating to “restart” lending, apparently no one in Washington really wants to restart lending or knows how to do it. I’ve heard at least two occasions of FDIC regulators (one in Georgia and one in Pennsylvania) sternly chastising suggestions of an unannounced and unofficial moratorium on new bank charters. Yet I challenge you to show me any new charters approved in the past five months. I know of none. Hmmm…

There has been much written about the shake-up in small business lending over the past 6 to 9 months, and I’ve been asked for my opinion and comments numerous times. America’s small businesses are the backbone of America’s job creation engine, yet window-dressing is mostly being done these days in Washington about it. Approximately 10% of the ARRA addressed small business needs. That’s right, the sector responsible for about 70% of net, new job creation got only 10% of the largesse. Amazing how truly out-of-touch these folks are.

It will be interesting to see how long the memories of small business owners are when the Big Banks jump back into the fray, as they surely will. I’d said for years that most Big Banks’ advertising slogans about “being there for their customers” didn’t match reality, and I’ve certainly been proven correct, again. In recent weeks, there have even been countless stories of small businesses staging protests against the Big Banks for harmful lending practices, for trying to put them out of business. I’m sure this isn’t the last of it.


  1. Scott Adam ALF says:

    without jack of all trades skills alot of people wouldn’t have food on their plates. Irealize there are 2 perspectives. The question is can capital gain a perspective from a poor persons point of view.Fortunately literacy helps. Do you ever feel like an investment opportunity is knocking, but won’t come in
    drop me a line and i might give you a big fish.

  2. Berma says:

    Generally I don’t comment on sites, but I must to say that the post of your topic really forced me to do so! Thanks, great article.

  3. Thad Shirk says:

    I’m getting interested in keeping fish and have started looking at aquiring an aquarium recently. I’d love to keep some larger fish, but I’ve been previously advised that I should start with something littler. I don’t suppose you have any ideas of the types of smaller salt water fish that i could start with do you? I appreciate your help

Leave a Reply

Your email address will not be published. All fields required.

Back to all Entries