Why Small Business Hates Banks

Karen Shaw Petrou

A firm we know needed a $20,000 letter of credit to extend its lease. So, it went in turn to the banks it uses, at each of which it maintains cash deposits well north of an order of magnitude larger than the letter of credit requested. Also, the firm has no debt and has annual revenues in the high seven figures. So, could it get the letter of credit renewed?

Hang on for a tale of excruciating negotiations and thousand-page document requests that left the firm begging its landlord please, please just to take the cash. Note to regulators: no examiners will be harmed in the telling of this true story.