Six words to describe business financing
This report is produced in direct efforts to provide more understandable insights about some of the most critical business financial problems that affect commercial borrowers. Our approach in this report is to describe the current state of commercial loans in six words. We have adopted similar models in other commercial financial statements such as “seven words to describe commercial property loans”. The “simpler better” perspective reflects the belief that after hearing a number of reports that are almost endless about commercial loan difficulties, what might be really needed by small business owners is a more concise explanation of this problem and the impact produced on the financing option their business.
Before continuing, it is important to emphasize that small business financial options are often more complicated than those anticipated by many business borrowers. We clearly do not try to characterize business loans and working capital financing as easy or simple. In fact, the opposite. The unfavorable reality that most of the business financing process is always very complicated and that meaningful improvement does not exist on the road is one of our sustainable observations. However, we feel it is important for every small business owner to have an absolute and total understanding of the whole commercial financial process in dealing with the complexity of the applicable commercial loans. To assist in providing more understandable insights about commercial loans and business banking problems, this special report is one of the comprehensive efforts on our side.
Our first example of the six words that describe the business financing option is “Bank said it is no more often”. For any small business owner who is still unaware of this hard reality and who might doubt this observation, a series of honest conversations with other business borrowers might eliminate all doubts. Bank failure to provide an adequate level of business loan is the main point to remember. It is important for small businesses to realize that they are not alone when they hear the bank they say no routine demand for commercial financing.
“The value of commercial property has declined dramatically” is the second observation. There are very few exceptions. The biggest impact of business financing is likely to occur in a commercial re -financing situation. Many banks are aggressively considering that existing commercial real estate loans and this literally force borrowers to find business re -financing even if business owners do not have an interest in re -financing their commercial mortgages. By reducing the value of commercial real estate, business re -financing will be a challenge for most small businesses.
“The credit path disappears quickly” is a description of six other words about commercial financing. Even the most successful business requires reliable sources of working capital financing, so this situation is very serious if a business cannot replace bank financing when it suddenly disappears. Even if a business still has an adequate credit path, it is important to realize that the bank is broadly reducing and eliminating business credit channels with almost without progress.
As our last observation in this report, “Business Financing in Intensive Care”. Extreme steps such as firing their bankers and finding alternative commercial funding sources need to be anticipated by small business owners in many cases. Bankers are not honest enough about commercial loan problems in the past, and no one hopes that they will openly announce that they are in all types of financial problems. Conversely, the view that applies from most banks is that they are normally loans for small businesses. When dealing with commercial lenders, commercial borrowers will require healthy skepticism.