Commercial Real Estate Loans and Plan B - By: Allan Michael Taylor

Contingency planning ("always have a Plan B") is likely to help commercial property owners and small businesses avoid complex problems. Business finance strategies often do not devote enough attention to contingency plans and what can go wrong with commercial real estate loans and working capital loans.

"Rare Birds" is a movie which is surely one of the most effective and entertaining depictions of contingency plans. William Hurt is the star of this movie which includes several timely variations of the warning, "Always have a Plan B". The movie will provide an enlightening perspective for any business owner who doubts the importance of contingency plans.

For a successful business, a Plan B mentality should be helpful to many business operations and not just financial ones. For various reasons, however, contingency planning appears to be under-utilized when business owners are seeking new commercial financing such as business loans and commercial mortgages.

This lack of contingency plans might be because commercial borrowers wrongly assume that there are not realistic alternatives to the commercial mortgage loan they currently have. With this thinking, business owners might believe that it would not make sense to devote time to exploring a contingency finance plan. If you have seen the recommended movie, it will become second nature to realize at times like this that businesses should "Always have a Plan B" regardless of whether it seems to be a waste of time or not.

In this regard, Plan B contingency commercial financing should be viewed as insurance to protect a business owner in the event that something goes wrong with their working capital management. Here are two relevant examples.

First, an increasing number of regional and local banks are pulling the plug on business financing activities. Usually when banks recall loans, they do so with very little warning. A Plan B should be developed for the contingency that alternative business loan arrangements could be needed if a business has commercial loans or commercial mortgages with a regional or local lender.

Second, many banks have added recall provisions that permit them to review loans periodically. Using the recall terms, lenders can eliminate marginal loans while they continue business financing for others. Within a limited period of time, the borrower will be required to refinance or payoff the entire loan if the lender exercises their recall provision. An especially disturbing aspect of these terms is that even though they might have been making payments on time, the borrower effectively loses all control. The best solution for avoiding this possibility is to review current business loans and explore Plan B refinancing options if recall terms are included.

Here is some closing encouragement for the potential situations where contingency plans might be appropriate for working capital financing and commercial real estate financing. "Everyone should have a Plan B".

About the Author

Stephen Bush and AEX Commercial Financing Group provide help to small businesses for refinancing SBA loans and business opportunity financing. Steve specializes in commercial loans and commercial financing.

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

Additional Articles From - Home | Finance | Loans