It is important for commercial borrowers to understand that they have more business finance choices than they are likely to realize. I refer to these commercial mortgage and working capital management choices as "Business Loans Without Banks" because the average commercial borrower probably believes that a traditional bank is the best source for a business loan. Non-traditional commercial lenders are increasingly considered to have the competitive edge for a number of commercial mortgage and business financing scenarios.

In some cases a traditional bank will offer to provide a business loan but will attach excessively stringent terms and covenants. In other cases a traditional bank will decline the commercial mortgage outright, perhaps because they do not even provide business financing to the commercial borrower's particular industry. In either case, the commercial borrower is likely to benefit by "Business Loans Without Banks".

Some business loan borrowers are likely to feel that a traditional bank is their best source for a commercial mortgage. However, because most traditional banks focus on a small number of established industries, non-traditional (non-bank) and non-local commercial lenders should be considered for most business financing situations. Therefore the recommended commercial loan strategy (as discussed in this article) is to obtain "Business Loans Without Banks".

As I reported in a previous business loan discussion, in many commercial mortgage situations it is common for a local bank to assess stricter commercial loan conditions than would typically be seen in a competitive business financing scenario. Such banks can often take advantage if there are few business lenders in their market.

An effective response by borrowers is to emphasize business finance options other than the traditional ones. It is not wise for business borrowers to depend only upon local banks for commercial loan possibilities. For common commercial financing circumstances, a non-local business lender can frequently provide the best business loan terms because of competition with other business lenders.

There are at least three commercial loan and working capital management situations in which business borrowers will typically experience that non-traditional lending sources can provide conditions that are best for the borrower: (1) commercial mortgage loan programs; (2) credit card factoring programs; and (3) working capital management programs for credit card processing.

Two of the worst commercial real estate financing problems for business owners can be eliminated by "Business Loans Without Banks". The first commercial mortgage business loan problem is the typical bank practice to eliminate most special purpose business properties (such as golf courses and funeral homes) from their lending portfolio.

A second business loan possibility is the frequent practice of many commercial banks to add recall and balloon conditions to their commercial loans. The bank can then require early payoff of the commercial real estate loan under stipulated conditions. Both commercial financing situations can easily be prevented by a non-traditional lending source.

Many merchants that accept credit cards in their business will qualify for a merchant cash advance with credit card factoring. A traditional bank will usually be a poor source of help if a business needs to use credit card financing.

Because successful business owners typically need more working capital than they can obtain from a bank, it is important for a business to consider "Business Loans Without Banks" via non-traditional lenders to help with this working capital management function.

A note from Stephen Bush — I originally wrote this report about a year prior to the massive problems with banks throughout the United States. 

• Firing Your Commercial Banker - Finding New Business Finance Sources

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