Information Center Banking & Finance

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Frequently Asked Questions about Banking and Finance

Q: Are all banks the same?

A: No. Some banks deal with a wide variety of consumer products like checking accounts, savings accounts, and investment accounts (IRAs), among others. Some banks, like a savings and loan, primarily handle mortgages and real estate transactions. Yet other banks, such as Farmer Mac banks, only deal with loans for agricultural businesses.

Q: How are banks regulated?

A: There are a number of federal agencies that regulate banks. For example, the Fair Housing Administration supervises and regulates mortgages. The National Credit Union Administration regulates credit unions. In addition, the Federal Deposit Insurance Corporation (FDIC) plays a regulatory role in deposit insurance.

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Financing a Small Business Through the Small Business Administration

Many small businesses are unable to obtain financing and must turn to the Small Business Administration (SBA). The SBA is a federal agency that assists small businesses in financing their venture by acting as a guarantor for a loan through a commercial lending institution. Some qualifying procedures must be followed before the SBA will guaranty a loan. However, the vast majority of new, for-profit businesses are eligible for financing through the SBA. If you are a small business owner who is interested in exploring SBA financing options, contact our firm, to schedule a consultation with an attorney.

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Investment and Business Loans

An initial consideration for any prospective business owner is financing. Often, capital must be raised so that the business can begin operation. The two most common forms of business capitalization are loans and equity investment. Loans generally involve borrowing from a commercial financial institution. Equity investment means that the business owner will seek out individuals to invest capital in his or her business. The equity investor, in exchange for his or her capital investment, takes ownership of a piece of the new business. Equity investment is essentially a financing path used to avoid a lending relationship with a bank. To learn more about the advantages and disadvantages of these models, contact our firm name to schedule a consultation with an attorney.

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Electronic Banking

The Internet is fast becoming a strong competitor of the traditional bricks-and-mortar bank as lending institutions integrate electronic banking into their list of products and services. Electronic banking involves a number of services, including automated teller machine (ATM) transactions, direct deposit, Internet banking, electronic fund transfers (ACH, EFT), and by-phone payment systems. Generally, existing consumer laws and regulations govern electronic banking.

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Banking and Finance - Insurance

Banks and financial institutions are generally covered by some form of the federally administered insurance program. The most commonly used insurance is provided by the Federal deposit Insurance Corporation (FDIC). A bank is insured for the purpose of customer and bank security. The specific type of insurance, and who is covered, is dependent on the type of bank and transactions involved. Some federally administered insurance protects the bank from default on loans, while other types of insurance protect the customer from financial loss due to bank failure.

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