Financial Strategies

iness owners develop their small business loan plans for future financing and refinancing throughout the United States, there is an increasing awareness that there have been significant business finance changes that cannot be ignored. Some of these measures are likely to end up being permanent, and even the temporary commercial mortgage loan and working capital loan changes are expected to be in place for an extended time due to the severity of the current financial climate.

The net result from business finance changes has been a reduction in commercial lenders as well as stricter standards for acquiring commercial loans and commercial mortgages. Unfortunately there has also been no shortage of misinformation about the availability of commercial funding.

A significant reduction in business lending activity overall is perhaps the most dramatic change. This has been due to several events occurring almost simultaneously. Several major commercial lenders have gone out of business altogether. Even though they have continued consumer lending, many banks have stopped commercial finance lending. Numerous business lenders have enacted stricter standards for the commercial financing transactions they are still willing to consider.

It remains to be seen how many changes will be permanent or temporary. But from a practical perspective, commercial borrowers are left with no choice but to adapt to the changing business finance environment. Business owners must be prepared to operate within a more complicated climate for commercial mortgage loans and small business loans regardless of how long the changes might be kept in place.

What should borrowers do about this? A primary option that business owners should explore involves looking beyond their local market area for help with commercial loans. A commercial financing expert operating throughout the United States should be helpful in improving upon this situation.

In addition to fewer business lenders to choose from, there are two other significant changes which must be anticipated by business owners before seeking new commercial loans. First, commercial lenders are increasingly demanding more collateral for virtually all business finance funding. Second, most lenders have cancelled or are about to eliminate unsecured lines of credit (usually called working capital loans) for many businesses.

Considering a business cash advance program based on future credit card processing transactions is likely to be an effective commercial financing strategy for overcoming the combined obstacles of more collateral, reduced unsecured credit lines and fewer lenders. This is proving to be one of the few sources of business funding that has not been adversely impacted by recent events. It will be productive to discuss the potential with a business finance expert who can provide advice about small business financing solutions including business cash advances and other financial options.

It is increasingly obvious that many banks will continue to modify their business lending programs in response to changing conditions. This means that another key change issue for working capital financing and commercial mortgages is the likelihood that more changes will be forthcoming in the near future.

To adequately prepare for future commercial finance changes that might (or might not) occur is a daunting task for a business owner. A commercial financing expert familiar with Plan B contingency financing for small business loans will prove to be a valuable resource for any borrower wanting to seriously deal with both current and future changes impacting the financial health of their business. By having a candid conversation with a commercial loan expert, business owners should be more capable of implementing an appropriate strategy for the vast changes which have recently occurred or are about to become effective for most business financing and working capital finance funding.

Although banks and other business lenders have made a pointed effort to portray themselves as lending normally, very few business owners are likely to suggest that there is anything normal about obtaining financing from current commercial finance programs. It has become a routine occurrence for small business owners to be told by their current commercial lender that it will be necessary to seek another source for commercial loans and working capital.

I published several earlier articles which addressed some of the problems that commercial borrowers are experiencing when they attempt to obtain working capital financing and commercial loans. It has become clear that current commercial lending conditions have become even more difficult for most business owners. For example, one of these commercial finance reports described the unfortunate possibility of firing your banker as one of several guerrilla financing techniques that might be required for a small business to survive in the face of extreme business banking conditions.

It would not be realistic to suggest that there are one or two obvious business lending sources that will solve the working capital needs for all businesses in need of help. Nevertheless I would not advocate the guerrilla financing tactic of firing your bank and your banker if there were not suitable alternative sources for small business financing.

Identifying the most likely alternatives can be accomplished in several ways but one of the most effective approaches will include detailed discussions with commercial loans experts that are experienced in nationwide business financing similar to what the business owner currently needs. Realistically the search for new commercial lending sources must start with an admission from a small business owner that they do in fact need to find a new source for business loans.

The best commercial finance solutions will depend on the business location, type of financing, kind of business, operating history and size of loan desired. A key point for business owners to remember is that there really are a number of viable and effective commercial lenders that are currently active in making commercial loans to businesses that are in desperate need of commercial financing. Some of the most realistic sources for small business loans are operating regionally rather than nationally.

In addition to the advice contained in this article, small business owners should review commercial finance resources such as The Working Capital Management Guide, a free online publication which focuses on short term capital financing strategies. Commercial borrowers should also have a candid discussion with a commercial loan expert who is capable of providing appropriate help for their unique business financing needs.

The current chaos in financial markets has changed how merchant cash advances should be evaluated. The use of credit card factoring and credit card processing to obtain working capital financing has recently become a more viable commercial funding strategy. Although this approach for securing business cash advances has been available, businesses historically seemed to prefer using other financing sources to get needed funds. While there are still other small business cash options which should be considered, the practical reality is that the choices available have changed dramatically for most business owners.

Recent changes in most commercial finance programs have resulted in many businesses scrambling to locate new sources for working capital and commercial loans. What has changed to make business cash advances a more feasible option for small business financing? Here are four of the primary reasons for a changing environment where business loans are involved.

First, the availability of unsecured lines of credit has all but disappeared for most small businesses. This was a favored method of business financing for years and will be sorely missed by many.

Second, in the recent past many business owners have probably used home equity credit lines to obtain needed cash quickly and simply. Most banks have reduced or eliminated these home equity loans in response to a nationwide residential funding crisis during the past year or so.

Third, banks are increasingly insisting on more collateral for their working capital loans and other commercial loans. For many business owners, providing additional collateral is not a feasible alternative.

Fourth, a growing number of local and regional banks are exiting the commercial lending business. In some cases, the business lending focus has shifted to larger businesses with long-term ties to a bank. This has produced an immediate and negative impact on relatively new and small businesses which especially need more working capital help in a challenging economic environment.

The four significant business financing trends noted above have resulted in a practical need for most business owners to now look much more actively at business cash advance programs. With such financing, businesses can obtain working capital cash based upon their credit card processing activity during the past six to twelve months.

Are there problems or pitfalls with this approach to obtaining small business cash? There are definitely problems to avoid with this specialized version of working capital financing. In fact I have prepared a number of special reports on this specific issue.

One major pitfall of business cash advances is the presence of a growing number of seemingly predatory lenders. These lending groups typically have one or more distinguishing negative characteristics.

One of these negative attributes is the apparent urgency by the lender to change the credit card processor used by a business. While there will always be legitimate reasons to consider changing the credit card processing arrangement, it should never be the first priority in a business cash advance program. If there is a rush to do so by the lender, it is probably due to a misguided attempt to obtain processing fees even if they are unable to provide a working capital advance.

Another negative characteristic is misrepresentation about how quickly business cash advances will be provided. While legitimate funding can typically be obtained in a month or less, business owners should be skeptical of agents who suggest that financing is routinely available in a week or less.

How can these seemingly predatory commercial lenders be avoided? Perhaps the most pragmatic solution for avoiding entanglements with one of these questionable lending sources is to have a lengthy conversation with a prospective lender prior to taking any action. Certainly it is especially unwise for a business owner to submit an online working capital cash application without having such a detailed discussion.