Three people emailed me the link to the New York Times Article this morning by 9:00 about banks cutting bank loans and financing to businesses in the U.S. The article discusses how banks are worried due to their recent losses due to the mortgage and credit crises and have now even cut back traditional lending to strong and growing businesses.

In other words, traditional financial institutions, conservative in the best of times, are now tightening their belts even more. Cutting back financing to industries and businesses that are in need of funds to grow is not going to help the economy, except for possibly, bank managers who have compensation tied to bad debt rates and potentially bank shareholders. The point here is that businesses, especially small and medium sized businesses that have traditionally relied on bank financing to help them fund a project, grow, renovate, expand increase productivity, land new accounts…have to look elsewhere for sources of funding moving forward.

Merchant Cash Advances have traditionally played the role, and have been positioned as providing funds to businesses that banks viewed as riskier than their traditional lending profile. As banks constrain their willingness to fund, merchant cash advances become a viable form of financing for a larger number of businesses.