Business Financing Reality Checks - By: Allan Michael Taylor

For their routine business finance needs, businesses are not easily finding a bank solution. Although for several decades banks have been a traditional source of small business loans, this role seems to be diminishing. As a result, it has become essential for borrowers to both evaluate their commercial finance needs and find new sources for commercial financing and working capital loans. This report provides a series of brief explanations about some of the most critical commercial lending issues likely to be confronted by small businesses.

The unfortunate reality that bankers are just not what they used to be for most small business finance situations is described by "banks are not the solution, they are the problem". It is rare for a week to go by without further negative news about the poor financial health of lending institutions. 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 grown from about 300 in early 2009 to just under 800 in the early part of 2010. 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.

"It is necessary to have realistic expectations" is an essential perspective for small business owners to have in the problematic loan climate displayed by most commercial lenders serving small businesses. The days of buying a business with very little down payment appear to be gone forever. The relative ease of getting working capital has been replaced by a less predictable borrowing climate for any form of working capital that is not secured by assets, and it is important to expect this lending situation. A much longer list of underwriting requirements that can realistically make refinancing attempts either difficult or impossible has produced a visible influence on efforts to refinance commercial real estate financing.

Some candid advice for small business owners desperately seeking new commercial finance funding is "avoid online applications for business financing". 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. Having an individualized and lengthy discussion with a small business financing expert to determine what the practical commercial loan options are in advance is an effective substitute for this questionable practice.

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. Contingency planning has always been a worthwhile task for a small business to employ for their management operations. 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. Businesses will frequently uncover financial improvements that they can make immediately by engaging in this forward-looking approach to working capital management and commercial loans.

Only a small part of the total business lending picture likely to be experienced by small business owners is covered by this brief evaluation. Unfortunately for small businesses the examples mentioned are only the tip of the iceberg when it comes to commercial financing problems. This discussion is provided as one tool for small business owners to use in their efforts to become more successful in securing reliable commercial loans and working capital financing. Some of the most important factors currently impacting small business financing were highlighted in this article.

About the Author

Steve Bush and AEX Commercial Financing are a consistent source of working capital advances - Stephen has offered working capital financing and business finance options for 30 years

Article Directory Source: http://www.articlerich.com/profile/Allan-Michael-Taylor/45501

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