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Six Words Describing Business Financing Options

By Stephen Bush

Republish: EasyPublish™ Published: 13Apr2010 Word count: 675 Viewed: 3198 time(s) Get Free Content For Your Site

Small business owners have probably heard an almost endless number of reports about commercial lending difficulties. Ultimately what commercial borrowers might need most is a more concise explanation about these problems and the resulting impact on their business financing options. This report was produced in a direct effort to provide more understandable insights about some of the most critical business finance issues effecting business owners. Our approach in this particular report is to describe current commercial finance circumstances in six words. We have adopted a similar model in other commercial loan reports such as "seven words describing commercial real estate loans".

Before proceeding, it is important to emphasize that small business finance options are often more complicated than anticipated by many business borrowers. It would be incorrect to assume that we are attempting to characterize business loans and working capital financing as simple and straightforward. In fact, quite the opposite is the case. Our ongoing observation is that most business financing processes have always been excessively complicated and that meaningful improvements are not on the way. In the face of the prevailing commercial lending complexity, we nevertheless feel that it is critical for each small business owner to have an absolute and total understanding of the entire commercial finance process. This particular report is one of several thorough efforts on our part to help in providing more understandable insights about commercial loans and business banking problems.

Our first example of six words describing business financing options is "banks are saying no more often". For any small business owner still unaware of this harsh reality and who might doubt this observation, a series of candid conversations with other business borrowers will probably remove all doubts. The primary point to remember is that banks are not currently providing an adequate level of business loans on a widespread basis. 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 second observation is that "commercial property values have decreased dramatically". There are very few exceptions. The biggest business financing impact is likely to occur with commercial refinancing situations. Even if a business owner has no interest in refinancing their commercial mortgage, many banks are aggressively recalling existing commercial real estate loans and this literally forces a borrower to seek business refinancing whether they want it or not. With decreasing commercial real estate values, business refinancing will be a challenge for most small businesses.

In another six-word description of commercial financing, "lines of credit are disappearing fast". 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. Even if a business still has an adequate line of credit, it is important to realize that on a widespread basis banks are reducing and eliminating business credit lines with almost no advance notice.

As our final observation in this report, "business financing is in intensive care". Small business owners need to be prepared to take more extreme measures such as firing their banker and finding alternative commercial funding sources. Bankers have not been sufficiently candid about commercial lending problems in the past, and nobody should expect that they will publicly announce that they are in any kind of financial trouble. On the contrary, a prevailing outlook from most banks is they are lending normally to small businesses. Commercial borrowers will need a healthy amount of skepticism when dealing with any commercial lender.

As we noted, this article is one of several efforts to help small business owners survive an extremely challenging commercial lending environment. By describing commercial loan difficulties in six words, this report was intentionally designed to produce a concise overview of several complex small business finance issues. A review of related reports such as "seven words to describe business cash advances" and "six words describing working capital financing" should also contribute to a better understanding of practical business financing options for commercial borrowers.

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