When Banks Stop Lending Money

  • SumoMe


Today we have seen another “historic” event, a global rate cut. Countries around the world got together and with the guidance of the US Federal Reserve cut rates.

Joining the rate cut were central banks in Canada, England, Sweden, Switzerland and the European Central Bank. Central banks in China, Hong Kong, Kuwait and the United Arab Emirates acted separately to cut rates, a move the Australian central bank had taken the day before. More Arab central banks are expected to do the same in coming days. Washington Post

Along with the interest rate cut there was also news of a major government bailout of U.K. banks. And yesterday it was reported that Iceland would get a hefty loan from Russia.

All of this is being done to make money cheaper and get it flowing again, the problem is that though this move makes money less expensive to borrow it does not remove the toxic assets. Banks, financial institutions, and even countries do not trust each other. No one knows who has what on their balance sheets that may take them down in the near future, and what that will mean to those attached to the sinking ship.

I lend to you, you go under, and then everyone questions my judgement and I go under. This is a no win situation. So What do the rest of us do while we wait for the world to sort this out??

When large institutions let you down where do you go to get the help you need? Yesterday I read an article at Tech Crunch about Seattle’s Top Entrepreneurs Banding Together To Invest In Startups and after today’s news it got me thinking where can you go to get money?

In April I wrote a post titled, Show Me The Money where I talked about circumventing the big lenders and going into angel, venture capital, individual, or group lending arenas. I highlighted four websites, one no longer exists, but the other three are still going.




These three websites have one thing in common, they have regular people investing in regular people. I look at someone like Warren Buffett, a man who came from humble beginnings and through hard work, education, and determination has built up an empire that any small country would envy.

Part of the problem right now is that investors really don’t know what they invested in, what their 401K, mutual funds, and retirement accounts are attached to. Main Street, Wall Street, it is all one street. So instead of just lying in the middle of the street hoping some big truck puts you out of your misery, why not do something to take control? Take your money and invest in individuals, ideas, and companies that are driven by real people as opposed to conglomerates.

The positive side to this huge mess may be that it pushes people to take control, educate themselves, and possibly even band together to help each other out. There was a time when a town worked collectively to build itself up, there was no one else to go to but your neighbor. I like what is happening in Seattle because those entrepreneurs and investors know their market, they know what works and doesn’t work in their backyard.

The advantages of people working together — better investment decisions, enhanced deal flow, the ability to combine their funds into larger equity investments, and group social attributes. The advantages of a small or medium sized business owner  or startup going to an investment group is that you become less of a statistic and more of a real entity. You can pitch your idea, get feedback, work together, and in some cases get some mentoring from some very impressive entrepreneurs.

I hope we see more investment groups come together to start investing in middle America. I think people investing in people will bring the soul back into our businesses and economy.

Quick side note…..

Before starting an investment group or going to one for your investment needs you should be sure to consult qualified counsel regarding federal, state, and local rules and regulations that may govern your organization. Attorneys and accountants can be invaluable to any organization, and you should avail yourself of their knowledge and background to ensure the legality and economic value of your angel group.

What do you think, do we bring our investments back to a local rather than global level, and if so would that get us out of this mess faster?

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About Author

Bridget is President of The Get Smart Web Consulting Group, a web presence and digital strategy firm with offices in San Diego County California and Collier County Florida. But more importantly she is a web, tech, and Twitter addict!