Most small businesses are currently experiencing difficulty in securing business financing, and this discussion will offer at least a partial explanation as to why this is happening.

Can good banks still be found? Are banks still going out of business even after receiving bailout funding?

Yes seems to be an appropriate answer to both questions. Unfortunately it has become increasingly difficult for innocent bystanders to tell the difference between a bad and good bank. It should be apparent that there is still a lending crisis that was not resolved by the bailout because (among other objective indicators) there continue to be ongoing weekly reports from the Federal Deposit Insurance Corporation about bank failures. While neither bankers nor politicians want to talk openly about this situation, the rest of us can still draw our own conclusions.

Do phantom commercial loans refer to business financing that lenders say is available even when this is not the case?

Yes, and the term when used in a lending context for financial products involving merchant cash advances is influenced by technology firms when they talked about products often called phantom software when they were trying to discourage customers from purchasing a competitive product even though the company that made the announcement did not have such an item actually available. Because there were so many documented instances in which the phantom software never materialized beyond a press release, the practice was usually viewed as controversial. The world of small business lending has now apparently adopted this questionable public relations ploy.

After they were given taxpayer funding by the financial bailout in 2008, are banks required to provide small business lending?

No, there were not such conditions placed upon the banks when they were saved by the taxpayer funds from almost certain financial collapse, and except from the viewpoint of the bankers themselves this is a mystery worth examining in much more detail. Because the assets are considered to be what is known as fungible, the recipients can effectively do what they want with the money. For this particular situation, the term seems to be perfect to describe the unusual outcome. It means that monetary assets are interchangeable and that for all practical purposes it is not possible to say what happened to the money given to the banks. Most banks saved from financial collapse now appear to be investing a significant portion in what most observers consider to be risky areas similar to what got them into trouble at the beginning of this crisis, and in any case there were no restrictive conditions which would require banks to provide any particular amount of commercial real estate loans or working capital financing.