Commercial Loan and Working Capital Financing Articles

A critical question that business owners should ask before seeking business financing: "What should I do if my bank says no?". I have published an article which describes strategies used by AEX Commercial Financing Group to overcome common situations in which banks frequently say no regarding commercial real estate loans.

I have also written a commercial financing article, "Why Do Some Banks Say Yes When They Mean No?" which describes how some lenders offer commercial loans with terms that they do not expect borrowers to accept. This unfortunate practice produces both confusion and delays for commercial borrowers.

Unfortunately banks are saying "NO" or saying "YES when they mean NO" much more often in the current financial climate (which is bordering on chaos in some locations). Commercial borrowers will need to be more prepared than ever when seeking to obtain new commercial financing. Much like statistics that show job-seekers should be prepared to hear "NO" 25 to 50 times or more before they hear "YES" when seeking a job interview, business owners should anticipate that they will encounter "NO" more often in almost all small business loan circumstances.

2009 UPDATE: There have been some recent significant changes regarding stated income commercial loans. Commercial borrowers should contact Stephen Bush at AEX for details which might impact their specific business financing situation.

A Stated Income business loan is quite different from a traditional commercial loan. Very few traditional banks use Stated Income (no tax returns and no income verification) for a commercial mortgage. Most commercial lenders will perform a thorough income verification as part of their underwriting process.

Business cash advance programs are one of the few remaining approaches to obtain working capital without a thorough business income verification process (although larger business cash advances will generally require financial statements and possibly tax returns).

The rapidly-changing commercial finance environment is likely to produce a series of new problems for business owners. To help address these evolving challenges, AEX Commercial Financing Group plans to play a prominent role in analyzing what is happening and what to do about it.

Publicizing actions being taken by business lenders throughout the United States will contribute to at least two worthy goals:

(1) To highlight controversial bank-lender practices with a view toward eliminating or reducing questionable lending tactics.

(2) To help business owners prepare for many business finance funding changes.

We will periodically update a summary of our findings which can be viewed by clicking on the "Commercial Financing Help" link in the right-hand column of The Working Capital Journal.

http://www.working-capital-journal.com

We encourage commercial borrowers to contact us to obtain more information and to describe their own problem-lender stories so that we can share their experiences with as broad an audience as possible.

Here are the primary reasons to consider credit card factoring (working capital advances based on future credit card processing volume for a business):

* A business cash advance based on credit card financing is one of the few viable options for reliably obtaining short-term business financing (this has proven especially true during recent months)
* Credit card receivables factoring is available to virtually any business that accepts credit cards in their business transactions (although home-based businesses have more limited access to this kind of commercial financing)
* There is no need for collateral
* Funds can be obtained very quickly
* There should not be any up-front fees or closing costs

The current volatility in working capital financing options has changed how business cash advances should be evaluated by small business owners. Here are three of the key factors behind the rapidly-changing funding environment for small businesses:

First, unsecured lines of credit have all but disappeared for many commercial borrowers.

Second, most banks are now requiring more collateral for business financing.

Third, many regional and local banks are exiting all business lending activities.

Most of us would like to view our banker as one of the family, and for most small business owners, the idea of "when to fire your banker" has probably never occurred to them. The average business owner is happy to have one less decision to make, so thoughts of firing their banker rarely become a top priority in the realm of working capital financing and SBA loans.

Business owners and commercial borrowers are now reluctantly admitting that banks are just not what they used to be. Just like many automobile manufacturers that are now a tarnished and shriveled version of what they once were, it seems like almost overnight most banks have lost our confidence. Candidly speaking, even if their commercial banker is their best friend, small business owners are increasingly realizing that they must look out for their own best interests because it is unlikely that their business banker is up to the task anymore.

If they are being truthful to themselves, most business owners will conclude that they should seek a new banker if keeping the old banker is holding the business back, either by bad advice or inadequate small business loans. This discussion is in no way meant to suggest that all banks are now bad or that all bankers are now bad. In today's complex economy, there are still good banks as well as bad banks. Similarly, there are also good bankers and bad bankers. The true nightmare scenario to confront for most commercial borrowers is when their current banking relationship involves a bad banker working for a bad bank.

We will leave the discussion of good banks and bad banks to another report. Overall we would conclude that if the current situation involves a bad bank and a not so bad banker, the most prudent outcome for a business owner is likely to be firing both the bank and the banker. Sometimes a good banker can be transformed into a bad banker simply by working for a bad bank.

Results are what count for any business, and business owners should not be reluctant to hold their banker accountable for producing inadequate results. For prudent commercial borrowers, firing your banker and your bank has become both a more acceptable and necessary solution when your business is not able to obtain sufficient business finance and working capital help.