This discussion is provided as one tool for small business owners to use in their efforts to become more successful in securing reliable working capital financing and small business loans, and everyone must hope for improvement in this situation. Some of the most important factors currently impacting commercial lending are highlighted in this article. It should be noted that this brief evaluation covers only a small part of the total business loan picture likely to be experienced by commercial borrowers. In other words, as bleak as this accounting might be, it is only the tip of the iceberg when it comes to commercial finance problems that exist for small businesses today.

A reflection of the realistic possibility that something will go wrong with a current small business financing option is “small business owners should have a Plan B”, and to prepare for this business owners should do some advance planning. For their management operations, contingency planning has always been a worthwhile task for small businesses. It is strongly recommended that a variation of contingency planning also be adopted to help soften the blow if problems develop with existing business finance services. By engaging in this forward-looking approach to working capital management and commercial real estate loans, businesses will frequently uncover financial improvements that they can make immediately.

“Avoid online applications for business financing” is some candid advice for small business owners desperately seeking new commercial finance funding. It is not prudent to provide confidential business finance information before it is determined that commercial financing is feasible for a particular financial need, and this suggestion is meant to emphasize the point. Without knowing more about the small business loan criteria that will be used by the commercial lender receiving the information, such automated application processes are an unnecessary convenience for the lender, and this does not translate to a sufficient reason for releasing private business data. An effective substitute for this questionable practice is to have a lengthy and candid individualized discussion with a small business financing expert to determine what the practical commercial loan options are in advance.

An essential perspective for small business owners to have in the problematic loan climate displayed by most commercial lenders serving small businesses is “it is necessary to have realistic expectations”. Gone are the days of buying a business with little or no down payment. The relative ease of getting working capital has been replaced by a less predictable borrowing climate for any form of working capital financing that is not secured by assets, and it is important to expect this commercial lending situation. A much longer list of underwriting requirements that can realistically make attempts to refinance either difficult or impossible has produced a visible influence on refinancing commercial real estate loans.

“Banks are not the solution, they are the problem” describes the unfortunate reality that bankers are just not what they used to be for most small business finance situations. It is rare for a week to go by without further negative news about the poor financial health of lending institutions, and it is likely for commercial borrowers to have even more trouble getting water from a well that is running dry with financial data like this. To illustrate with just one example, it was recently noted that there are now more problem banks (banks rated by the Federal Deposit Insurance Corporation as being more likely to fail) then anytime during the past two decades. Troubled banks have almost tripled between early 2009 (when there were approximately 300) and the first quarter of 2010 (when they increased to about 800).

Business owners are not easily finding a bank solution for their routine business finance needs. Banks have been the traditional source of small business loans for several decades, but this role seems to be growing to a close. The search by commercial borrowers for help in understanding business financing is likely to be an ongoing activity for some time to come.

Author Bio: Stephen Bush has provided small business finance expert advice and options to refinance business debt and commercial mortgages throughout the United States for over 25 years. Steve and AEX Commercial Financing Group are an experienced source of commercial loans and merchant cash advances.

Category: Finances
Keywords: small business loans,commercial lending,business loan,finance,business,lending,lender