The Wall Street Journal just reported that the number of commercial banks in the US has shrunk to an all time low of 6,891 banks. In 1984, the US had approximately 18,000 banks that were in operation throughout the nation. As a result of a lingering recessionary economy along with continued increased oversight from our nation’s bank regulators, the number of banks in our country will continue to decrease over the next several years. Some experts predict that by the year 2020, there will be less than 5,000 banks in the US.
In the last three years, only one new bank (de novo) has received a new bank charter in the US. That particular bank is located in Bird-In-Hand, Pennsylvania. The demand for new; start-up banks in our country is virtually non-existent.
In terms of the small business community; this phenomenon has had and will continue to have devastating effects on this sector’s ability to obtain conventional bank financing. Small businesses and smaller real estate developers now have less conventional funding sources to solicit for their funding requirements. In order to combat this impediment, this sector will need to canvass the non-bank lending marketplace so that they can locate multiple alternative funding sources for their working capital needs. As a result, non-bank lenders will continue to gather additional market share in the small business lending arena.
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