A Few Choice Words About Small Business Loans
Comments (0) Our concise descriptions are in no way meant to characterize business financing and working capital management as either simple or straightforward. By describing small business financing and working capital help issues in six words, this report was designed to produce a concise overview of several common lending difficulties. In the face of the prevailing commercial lending complexity, we feel that it is critical for each small business owner to have an absolute and total understanding of the entire commercial finance process.
Our first six-word observation in this article is “business financing will require aggressive action”. Extreme measures such as firing their banker and finding alternative commercial funding sources for small business loan options will need to be anticipated by small business owners in many cases. Nobody should expect that bankers will publicly announce that they are in any kind of financial trouble after recalling that they have not been sufficiently candid about commercial lending problems in the past. In a contrary viewpoint, banks seemingly maintain that they are lending normally to small businesses. When dealing with any commercial lender, commercial borrowers will need a healthy amount of skepticism.
Our second observation in this report is “most commercial property values have dropped”. There are very few exceptions to this disturbing trend. The biggest business financing impact will probably be produced by commercial refinancing situations. Many banks are aggressively recalling (rescinding or revoking) existing commercial real estate loans and this literally forces a borrower to seek business refinancing from another lender even if a business owner has no interest in refinancing their commercial mortgage. Business refinancing will be a challenge for most small businesses in light of widely decreasing commercial real estate values.
Our third example of six words describing business financing options is “bank commercial loans have limited availability”, and it is important for small businesses to realize that they are not alone when they hear their bank say no to routine requests for commercial financing. A series of candid conversations with other business borrowers will probably remove all doubts for any small business owner still unaware of this harsh reality and who might doubt this observation. The failure of banks to provide an adequate level of small business loans on a widespread basis is the primary point that business owners should examine more closely.
“Business lines of credit are disappearing” is our final six-word description of commercial financing. Even the most successful businesses need a reliable source of working capital financing, so this situation is especially serious if a business cannot replace bank financing when it suddenly disappears. On a widespread basis banks are reducing and eliminating business credit lines with almost no advance notice, and this must be realized even if a business still has an adequate line of credit.
