Business Finance
Recent Changes Impacting Commercial Financing
There have been significant changes which will impact new business financing, commercial construction financing and refinancing of commercial loans. Several of these business finance changes are highlighted below. However, there are important details not included below due to space limitations. Please contact Stephen Bush (AEX's Chief Executive Officer) for additional clarification.
Firing Your Commercial Banker
In today's rapidly-changing business finance and working capital world, it has become increasingly obvious that there are "good bankers" and "bad bankers" just as there is an emerging distinction between "good banks" and "bad banks". To
highlight some of the issues associated with this delicate subject
area, we have prepared a report entitled "Firing Your Banker" — a link
to this discussion can be found in the right-hand column of The Working
Capital Journal. For prudent small business owners, firing your bank and your banker has become both a necessary and acceptable solution when your business is unable to obtain sufficient working capital and business finance help from your existing bank relationship.
Changes in Number of Active Commercial Lenders
What can business owners do about this? One effective approach that commercial borrowers should explore involves looking beyond their region for help with commercial real estate loans and other commercial financing. To accomplish this most efficiently, a business financing expert operating throughout the United States (such as AEX) should be helpful.
Changes for Stated Income Commercial Loans
First, one commercial financing program where we have NOT seen changes in stated income financing: business cash advances using credit card processing. For this important working capital financing program, income documentation continues to be necessary only for larger business cash advances (financial statements and tax returns have always been a normal funding requirement for larger merchant cash advances).
Second, a stated income approach (no income verification and no tax returns) for commercial mortgages has been effectively eliminated by most commercial lenders and some stated income business lenders have gone out of business altogether.
Commercial Construction Financing Changes
Recent uncertainties in financial markets have resulted in an apparent shortage of commercial construction funding. The shrinkage of capital for
both commercial real estate loans and commercial construction
financing means that in many cases commercial borrowers will need to look beyond
their local area for effective commercial finance help by consulting with a national business financing expert such as AEX Commercial Financing Group. AEX continues to be successful in arranging
commercial construction loans throughout the United States.
UPDATE: With very few exceptions, we are finding that financing for commercial construction projects is not readily available. Please contact us for more details.
Commercial Borrowers Are Hearing Their Bank Say "NO" Much More Often
It has always been awkward and confusing for a small business owner to hear their banker reject a vital commercial financing request. The confusion often results from not having a firm idea of what to do next, and due to the current chaos in financial and credit markets, such rejections are being heard much more frequently.
This does mean that many commercial borrowers are increasingly finding that their customary commercial finance funding sources might not be reliable anymore. Astute business owners will discover that there are viable alternatives and effective business finance funding solutions. Starting several years ago, AEX Commercial Financing Group created a number of practical strategies for overcoming situations in which banks often say no regarding commercial mortgages and commercial loans. As you might imagine, these strategies have become even more relevant and useful for business borrowers in today's extreme commercial funding environment.
Changes in How Business Cash Advances Are Being Used
For most small business owners, the chaotic funding conditions which have impacted almost all commercial financing programs have changed how merchant cash advances are being used. The practical reality for most businesses is that effective options to get working capital quickly have been reduced.
Here are three of the key change factors behind the current funding environment for businesses:
(1) Most lenders have eliminated or are about to cancel unsecured lines of credit for small businesses.
(2) Many local and regional banks are reducing all or most of their commercial lending activities.
(3) Banks are demanding more collateral for almost all business finance activities.
On balance, the three changes noted above have significantly INCREASED the use of the AEX Business Cash Advance Program throughout the U.S. because this working capital funding program effectively deals with all three of the key changes impacting most business lending.
Please review the following comment (New Commercial Funding Programs for Working Capital) which discusses NEW working capital management options that are ALSO effective in successfully addressing the three key change factors noted above.
NEW and MORE EFFECTIVE Commercial Funding Programs for Working Capital Management
Whenever commercial lenders drop the ball and fail to make small business loans in a normal fashion, the competitive and dynamic nature of the U.S. business economy frequently results in NEW business lenders that operate more effectively (and these new lending sources often quickly replace the old and ineffective commercial loan providers). We are definitely seeing a dramatic example of this theory in action with recent developments for improved, less costly and more flexible business funding alternatives for working capital management.
PLEASE CONTACT AEX FOR A CANDID DISCUSSION ABOUT THESE NEW COMMERCIAL FINANCE FUNDING CHOICES.
FOR EXAMPLE — One new short-term business loan program available through AEX Commercial Financing Group is particularly well-suited for business owners needing working capital for a period of one year or less in amounts from $25,000 (although smaller amounts are also possible) to $100,000.
The Working Capital Journal — A Comprehensive (and Free) Business Finance Resource
The Working Capital Journal is published by AEX Commercial Financing Group as a free and comprehensive resource for small business owners. A snapshot of recent Journal headlines is shown below.
ONE SUGGESTION FOR DEALING WITH COMMERCIAL FINANCING CHANGES —
A critical component in dealing with the commercial finance change issues noted above (as well as some other business financing changes not included in this particular summary) is adequate contingency planning. For many years AEX Commercial Financing Group has advocated the importance of businesses having a "Plan B" for commercial funding. The extent and speed of recent changes impacting virtually all business finance funding transactions has certainly confirmed the value of having a contingency business funding plan in place. Commercial borrowers should contact AEX for assistance in establishing and implementing this vital and practical strategy for their working capital management and commercial loan programs.
Commercial Financing Articles
Understanding Merchant Cash Advance Options — When evaluating merchant cash advances, it is not unusual to hear that costs or terms were not reviewed thoroughly before signing a credit card processing agreement, often because small business owners chose their processor based upon a recommendation from a colleague or banker. Businesses should consider asking for a review of cost saving opportunities involving their credit card processing even if their current processor is willing to work with the business cash advance provider. This might be the perfect opportunity to review the cost structure currently in place for a business because this approach to small business financing options is tied so directly to credit card processing activity.