Small Business Financing Help

A good starting point when seeking small business financing help is to ask the questions that matter the most. These might include questions like the following:

The quiz shown below will demonstrate some of the background reasons why small business owners are experiencing so much difficulty in obtaining business financing.

Are there really any good banks still standing? Are banks still failing even after the financial bailout?

For both related questions, yes is an appropriate but qualified answer. Unfortunately it has become increasingly difficult for innocent bystanders to tell the difference between a bad and good bank. It should be apparent that there is still a lending crisis that was not resolved by the bailout because (among other objective indicators) there continue to be ongoing weekly reports from the Federal Deposit Insurance Corporation about bank failures. While neither bankers nor politicians want to talk openly about this situation, the rest of us can still draw our own conclusions.

When lenders say that funding is available even when it is not, is this sometimes called phantom business loans?

Yes, and the terminology as currently used by lenders offering services for merchant cash advances builds upon a similar usage by technology engineering firms in announcing products often classified as phantom software when they wanted to discourage consumers from purchasing from a competitor even though the company that made the announcement did not actually have an item currently for sale to the public. Because there were so many documented instances in which the phantom software never materialized beyond a press release, the practice was usually viewed as controversial. The world of small business lending has now apparently adopted this questionable public relations ploy.

Are banks required to provide small business lending after they were given taxpayer funding by the financial bailout two years ago?

No, there were not such conditions placed upon the banks when they were saved by the taxpayer funds from almost certain financial collapse, and except from the viewpoint of the bankers themselves this is a mystery worth examining in much more detail. Instead the recipients can effectively do what they want with the money because the assets are considered to be fungible. This seems like a term invented just for such an occasion. As used for banking purposes it is not possible to say what happened to the money given to the banks because the monetary assets are interchangeable with other funds. But in any case, they were not burdened with a stipulation to provide commercial mortgages and appear to be investing a significant portion in what most observers consider to be risky areas similar to what got them into trouble at the beginning of this crisis.

One of the most difficult tasks when solving a small business finance problem is analyzing the apparent wisdom of commercial loan experts. Several conflicting opinions will inevitably emerge in any attempt to obtain advice about business financing. Applying wisdom from earlier generations can sometimes provide a refreshing lesson that is relevant to current circumstances at hand, and this type of help should not be overlooked.

The Watergate break-in four decades ago resulted in a genuine constitutional crisis. Out of that complex political and criminal drama, an enterprising pair of journalists (Bob Woodward and Carl Bernstein) eventually cracked the case by a number of skillful techniques. This was a team effort that also involved many other participants. One of the most helpful pieces of advice was to "follow the money" as they investigated the complicated puzzle that was made more confusing by the multiple and intentional deceptions by various parties.

There appear to be a number of instances in which the wisdom of "following the money" could be very instructive in the world of small business finance. One mystery that quickly comes to mind involves the ongoing uncertainty about what happened to several hundred million dollars given to banks which was supposed to help small business lending but cannot be accounted for by most banks when they are asked for a detailed accounting of how these funds were spent. Primarily because of the woeful state of business loans and commercial real estate financing, this question does continue to keep coming to the surface.

When small businesses are seeking help with working capital and commercial mortgages, they should consider a "follow the money" mindset. In the simplest form of this guideline, borrowers should not hesitate to ask a business lender for detailed information about their actual commercial loan activity during the past several years. Their willingness to openly share how actively they are really lending to small businesses on a regular basis will be just as illuminating as any failure to be forthcoming with this data.

Some very effective small business financing help is available at no cost, and business owners should start any search for advice by reviewing such free advice. One example of a practical resource available for free online is The Working Capital Journal (see some recent comments at the top of this page).

However, such resources are not without their limitations. Due to the complexity of small business loans combined with a chaotic commercial lending climate, the next step for commercial borrowers will often involve obtaining individualized assistance from a commercial financing expert. How should small business owners find a business finance consultant to help? One suggestion is to include the power of the internet and conduct a search for "working capital finance expert" or "small business financing expert".

The prudent use of small business consulting to produce effective and timely results has become a necessary part of the business finance process for commercial borrowers. The AEX Referral Program allows anyone to refer commercial finance possibilities and receive compensation upon completion of financing. With this program, AEX performs all of the necessary work: it is not necessary for the referring individual to have any knowledge of business financing and a license is not required to receive referral fees from AEX. Referral agents can be friends, relatives, business colleagues or advisors.

An important part of commercial bank consulting is to identify one or more candidates qualifying as a good bank if a small business is currently using what is deemed to be a bad bank and still needs an ongoing commercial banking relationship in some form. In the end all that is really needed is just one bank that meets specific business requirements. In a dose of reality, only a few good banks can pass the test for final consideration when a new business bank is selected based upon specialized and unique small business finance criteria.