One reason the modern financial system is so huge and complex is that so many of its features have been extended to individuals.
I, a rather average middle-aged dude, maintain 4 bank accounts, 6 lines of credit, 4 investment accounts, and 4 lines of insurance [1]. Think of the complexity involved in providing those services to me--now multiply by tens of millions of other people. This does not even get into the financial instruments of businesses and governments, which are far more complex.
The end result of all this complexity is that individuals like your friends can accumulate and access large sums of money to lend to you to start a business. Most new business financing does not come from banks, it comes from individuals, families, or alternate financial businesses like angel funds, venture capital, hedge funds, etc.
I, a rather average middle-aged dude, maintain 4 bank accounts, 6 lines of credit, 4 investment accounts, and 4 lines of insurance [1]. Think of the complexity involved in providing those services to me--now multiply by tens of millions of other people. This does not even get into the financial instruments of businesses and governments, which are far more complex.
The end result of all this complexity is that individuals like your friends can accumulate and access large sums of money to lend to you to start a business. Most new business financing does not come from banks, it comes from individuals, families, or alternate financial businesses like angel funds, venture capital, hedge funds, etc.
[1]
Bank accounts - 2 personal checking - 2 savings
Credit - 1 mortgage - 3 credit cards - 2 check cards
Investments - IRA - 401k - HSA - Brokerage (trading)
Insurance - Home - Auto - Life - Health