Mortgage Rates, Bank Loans and Other Money Matters

I read an article in the local paper this morning about how mortgage interest rates are at a new low; the print went on to say that this was a good thing for homeowners wishing to refinance, giving them another option to consider in efforts to save money. Further on in the article a mention was made that most homeowners, unfortunately, would not be able to qualify for refinancing, due to the banks' insistence on sterling credit approval ratings, the need for substantial up-front payment of loan origination fees and plethora of other hoops that the banking industry is making potential refinancers jump through. Again it seems that the very people who can most benefit from lower interest rates or more money in their pockets at the end of the work day are victim to corporate greed; correct my simple reasoning if it's wrong, but did not the taxpayers of this country all contribute to bailing out our floundering banking industry? It's stories like this that make me wish our banks would extend the same faith now that the shoe is on the other foot. I went to a lecture given by a local entrepreneur a few months ago, a guy that built a few businesses and sold them, only to go on and start the cycle again. The gentleman was adamant that the business model in this country has changed: no longer does the banking industry care about what property you can leverage against a loan, no longer do they care about the ramifications of your ideas or the sustainability of your business plan; the bank cares solely about the liquid assets that you bring with you to the table, how deep the pockets are of your silent partners, how much money you have in the bank. I sat down with a loan officer at a local bank one afternoon to run some numbers; I'd figured out what I would need to outfit a small restaurant, what I'd need to purchase and retrofit a small building, what I'd need to pay for china and glasswares and flatware. I figured that between my mutual fund, my meager savings and a large credit line on my personal credit card I could reasonably put 15-20% down on the 250K that I'd need to get my business off the ground. I was naive in assuming that a business loan would work roughly the same as a mortgage. The bank told me that I would need at least 40% down in cash, that they would not underwrite a loan for a restaurant, nor would they SBA. My loan officer stressed that the restaurant industry was too high risk, but oddly told me that now was a great time to start a business as bank loan rates are so low. Nothing ventured, nothing gained I guess, but it made me wonder why the bank wouldn't simply tell me that the current low rate of 7.5% was unavailable to "high risk" businesses, but they'd be able to offer financing at 17%...to simply say that they are unable to offer financing, period, is unacceptable. I can call citibank and have $35,000 put in my account overnight sans questions (at a hefty rate of interest), but the people that are supposed to be providing help to business are far from helpful. Big business it seems takes care of only its own. I'd like to see the bank change it's motto from "I can do that" to "Most likely, the answer will be no".

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