Commercial Financing Heads in a New Direction - By: Allan Michael Taylor

Commercial financing is heading in a new direction. The journey for small business loans is likely to have all the adventure and uncertainties experienced by a wagon train over a century ago. As historians know, wagon trains often encountered serious obstacles even when they were led by expert wagon-masters. Results for commercial borrowers will be confusing, uncertain and painful at times based upon what we are observing with business financing. Business owners should anticipate unexpected challenges along the way but nevertheless have better results, particularly with the help of a business loan expert.

Because banks and other business lenders have changed dramatically in a short period of time, this has created one of the key elements which led to the new directions for commercial financing. These changes are not expected to be temporary in nature. Some commercial lenders have gone out of business altogether, while other banks have reduced or stopped their small business loan activities. This has been especially true for specialized business financing such as funeral home financing. While their actions suggest otherwise, many banks have announced that they are lending normally. Numerous banks have eliminated commercial lines of credit and other non-collateralized commercial loans. Reports of banks notifying business owners that they have only a few weeks to refinance their existing loans elsewhere have been widespread and common. The new directions for commercial borrowers are not optional or voluntary with these multiple bank examples. Business owners might find themselves without reliable business loan and working capital financing if they do not quickly move in a new direction for their business financing.

The choices when seeking new directions will be more limited for businesses needing help with specialized business financing such as funeral home business loans and golf course financing. Small business financing was already difficult in most instances for special-purpose commercial real estate. The urgency of finding new commercial finance sources might turn out to be advantageous for the owners of funeral homes and golf courses. Unless a new lender was specifically needed for one reason or another, most borrowers have typically not been looking for new commercial finance sources. Now that many golf course and funeral home owners (as well as many other business owners) have literally been forced to find new sources for their commercial mortgages, a surprising number of these business borrowers are finding better commercial loan terms than they previously had.

Different lenders are emerging to replace the old ones, largely because business lending is so competitive. The banking industry is beginning to resemble other aging industries such as automobile manufacturers as working capital financing moves in a new direction. Business owners might now find that their business financing and working capital financing choices have improved, although the similarities to automobile manufacturers are surely not welcomed by bankers.

About the Author

Stephen Bush and AEX Commercial Financing Group specialize in business financing services and commercial loans. Steve provides working capital management advice and business financing options.

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