Six years since the financial meltdown, Main Street hasn't yet fully recovered and businesses are still being impacted by tighter lending standards.
Even amid historically low-interest rates, start-ups aren't rushing to traditional banks for capital. More entrepreneurs are instead turning to alternative lenders, a group of nontraditional lending options sometimes called shadow banking.
But looser lending standards for quick cash come with risks, as shadow lenders aren't regulated and related fees can be steep. Industry watchers also note easier cash can be addictive, and some entrepreneurs spiral into a vicious cycle of mounting loans.
The growing worry now among some financial experts is a repeat of circumstances that led to the 2008 meltdown. Nonbank lending was a contributing factor in the crisis, as firms lent money to low-quality borrowers, who then defaulted in droves.
"Anything in excess can create a tipping point we want to avoid," says Ralph Bumbaca, senior vice president at TD Bank in New York City. Small companies should be wary of predatory lenders. "Given the recent experience in the housing market … we don't want that to reoccur, especially in the small business sector, which is a very important economic engine for our communities," Bumbaca said.
Even JP Morgan Chase CEO Jamie Dimon is worried.
At an Institute of International Finance meeting in Washington, D.C., in October, Dimon said shadow lenders keep him up at night as "no one is paying attention" to nonbank lending.
"What you don't want to do is push so much risk into this nonbank financial system that that is the next thing that blows up because no one was paying attention to it, and that has happened before," Dimon told CNBC.