How to Evaluate Your Finance Department

This report was produced in a direct effort to provide more understandable insights about some of the most critical business finance issues effecting commercial borrowers. Our approach in this report is to describe current commercial loan circumstances in six words. We have adopted a similar model in other commercial finance reports such as “seven words to describe commercial property loans”. The “simpler is better” perspective reflects the belief that after hearing an almost endless number of reports about commercial lending difficulties, what small business owners might really need is a more concise explanation about these problems and the resulting impact on their business financing options. Before proceeding, it is important to emphasize that small business finance options are often more complicated than anticipated by many business borrowers. We are definitely not attempting to characterize business loans and working capital financing as either straightforward or simple. In fact, quite the opposite is the case. The unfortunate reality that most business financing processes have always been excessively complicated and that meaningful improvements are not on the way is one of our ongoing observations. 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 in the face of the prevailing commercial lending complexity. To help in providing more understandable insights about commercial loans and business banking problems, this particular report is one of several thorough efforts on our part. 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 failure of banks to provide an adequate level of business loans on a widespread basis is the primary point to remember. 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. “Commercial property values have decreased dramatically” is a second observation. There are very few exceptions. The biggest business financing impact is likely to occur with commercial refinancing situations. Many banks are aggressively recalling existing commercial real estate loans and this literally forces a borrower to seek business refinancing even if a business owner has no interest in refinancing their commercial mortgage. With decreasing commercial real estate values, business refinancing will be a challenge for most small businesses. “Lines of credit are disappearing fast” is another 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. 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”. Extreme measures such as firing their banker and finding alternative commercial funding sources will need to be anticipated by small business owners in many cases. 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. When dealing with any commercial lender, commercial borrowers will need a healthy amount of skepticism.

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Small Business Loans and Working Capital Special Reports

The practical overview in this article will describe some useful small business loan resources which should be evaluated by business owners as part of a systematic process for obtaining working capital financing and commercial loans. To locate any site referred to in this article, commercial borrowers should either contact the author directly or use a leading internet search engine. All of the suggested business finance resources are free and available online.

Small business loans have always been more complicated than realized by most business owners. A prudent approach to working capital financing and commercial loans is becoming more difficult for most commercial borrowers. Recent commercial financing uncertainties involving commercial mortgages and SBA loans have added significantly to the complexity of the entire commercial lending process.

By searching for “commercial mortgages and commercial loans guide”, the first suggested resource will be identified. This site includes candid advice about avoiding problems with commercial real estate loans and small business loans. Also included are some especially relevant articles. A prime example is a special report describing what a commercial borrower can do if a bank declines their commercial mortgage loan application.

A second resource can be located by searching online for “working capital financing special reports” or “commercial loans special reports”. This will provide links to a wide variety of recent articles addressing relevant issues such as difficulties which are likely in refinancing SBA loans. Commercial borrowers should especially benefit from reading about recent adverse developments involving business cash advances and business finance programs.

A third key commercial funding resource can be reached by searching for “business cash advance and working capital guide”. As you might expect, this particular site primarily addresses issues related to working capital strategies. Of special note at this site is a small business cash management executive summary. This summary report includes a list of ten problems to avoid with credit card factoring.

A fourth resource of general interest to small business owners will be found by searching for “working capital help” or “working capital journal”. This includes a discussion of predatory lenders which should be avoided. Also provided is a comprehensive update about the many evolving changes for business finance programs.

A fifth resource which should be helpful to anyone that currently owns or is about to buy commercial property can be found by looking for “real estate investment property loan and business finance guide”. This site will provide a useful perspective about some critical problems to avoid with SBA loans and conventional commercial mortgages. For example, a report at the site discusses how to avoid malpractice with commercial loans.

For additional insights about small business loan reports available through internet sources, we recommend including terms like “avoiding problems” together with other descriptions such as “commercial mortgage loans” and “working capital”. For example, by searching for “avoiding problems with working capital loans”, commercial borrowers should obtain useful insights about difficulties to be avoided in their own business financing efforts.

Some precautions in this approach to business finance research are appropriate. Highlighted below are two of the more important aspects.

First, because of the complicated nature of small business loan underwriting, there is really no substitute for individualized discussions between a commercial borrower and a knowledgeable business finance advisor. Prudent business owners should insist on detailed and personalized interactions with a working capital funding expert before finalizing their commercial loan decisions.

Second, most business finance strategies are highly likely to be more complex than expected by commercial borrowers. Although written sources can identify general commercial loan problems for business owners to anticipate, there will usually be specific complexities that require more detail than can be provided in a generic article.

It is likely that business owners will gain helpful insights about the changes currently featured in the business finance news by devoting some time to reviewing sites through the search phrases noted above. Although it is true that there are new and substantial small business loan problems to be confronted by commercial borrowers, in most cases these will be difficulties that can be successfully overcome with prudent advance preparation.

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