The most common source of small business capital financing is the local commercial bank. From start-up enterprises to expanding operations to maturing businesses, owners can find a sympathetic ear at the local bank. That is, so long as they can meet the mysterious, evolving, and intangible requirements defined as the banker’s Five Cs of credit (see Chapter 3).

Banks are regulated institutions monitored by sometimes inconsistent overseers using murky regulations. Most of the regulators are well-versed on the science of banking but have personally never made a loan. Despite regulation and the growing evolution of competition, banks still provide about half of all commercial business financing in the United States. Commercial lending ...

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