Commercial Mortgage Loans

Contingency planning ("always have a Plan B") is likely to help commercial property owners and small businesses avoid complex problems. Commercial finance strategies often fail to include adequate attention to contingency plans and what can go wrong when it comes to working capital loans and commercial financing.

For a successful business, a Plan B mentality should be helpful to many business operations and not just financial ones. For various reasons, however, contingency planning appears to be under-utilized when business owners are seeking new commercial financing such as business loans and commercial mortgages.

Formulating a Plan B does not mean that there is already a problem to be solved. Instead the rationale for contingency planning is to establish what to do when and if something does go wrong. For example, "What should I do if my banker calls me next month to inform me that the bank no longer will finance my commercial mortgage loan?"

The logic of having a contingency plan B already in place for this kind of possibility is that banks rarely provide any advance warning that they are about to pull the plug on a small business loan. Once they have done so, the time period for a commercial borrower finding another lending source will depend upon the written loan agreement. A period as short as 30 to 90 days is not uncommon. In today's chaotic commercial mortgage circumstances, this will be difficult (if not impossible) unless a new commercial loan source has already been identified.