The banks could fail to categorize the loans as risky, but any loan reviewed by an examiner would not only be criticized for risk, but for failure to rate the risk adequately. Banks live and die by their exams. If a bank takes unwarranted risk, the examiners can close it. Basically, there is no good reason for a bank to take the risk involved in loans to most start-up companies. They have all the risk of a venture capital firm, but a potential net return of roughly what you get on your savings account.
Banks can, and do, play a roll in small business.
Banks work with government guaranteed programs to provide loans for these kinds of ventures. Banks also make numerous home equity, and other, personal loans to small business owners. By the same token, however, banks really can't be expected to take the risks of an owner without the same potential returns.