Guerrilla Loan Tactics for Small Business Survival

We have published a commercial loan and short-term working capital "Survival Guide" summarizing the most effective guerrilla financing options for small businesses to consider in the current weakened banking environment — a link to this guide can be found in right-hand column of The Working Capital Journal. It is increasingly likely that many commercial borrowers will need to do "whatever it takes" and include aggressive use of guerrilla loan tactics when seeking commercial finance funding required for their business to survive.

The Good Commercial Banks vs. The Bad Banks

One of the most perplexing situations for commercial borrowers is the realization that there are now "good banks" and "bad banks". Because business owners should be prepared to act quickly and aggressively for protection of their own financial interests, we have published "Good Banks - Bad Banks" — a link to this report can be found in The Working Capital Journal (right-hand column).

Firing Your Commercial Banker

For prudent small business owners, firing your banker and your bank has become both a more necessary and acceptable solution when your business is not able to obtain sufficient working capital and commercial mortgage help. 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.

Business Finance Consulting

Small business owners are likely to need business finance consulting help to resolve many complications that have emerged (or will emerge soon) during the current financial crisis. AEX Commercial Financing Group is devoting increased efforts to ensure that we will be able to assist as much as possible. For example, we have recently discontinued our commercial loan officer training program to allow us to spend much more time on individualized consulting with commercial borrowers. As a direct result of that decision, AEX is now spending much less time with business loan brokers and much more time with business owners.

While some of our business consulting efforts are directly related to establishing new working capital loan or commercial mortgage arrangements, we also devote significant time to helping business owners formulate contingency business financing plans. For many years we have advocated the importance of "Always having a Plan B" — the financial chaos that has become common due to recent events has made such "what if?" thinking and advice more prudent than ever.

Some of our advice is readily available for free on various AEX websites. AEX Commercial Financing Group has consistently received positive feedback such as this recent comment — "Loved your website. Plain, simple and to the point."

For personalized and candid business finance consulting, AEX charges reasonable fees. While commercial borrowers increasingly need straightforward and effective working capital advice (as noted above), our view is that such help is NOT readily available. Given the troubling financial times that are currently impacting almost all commercial finance situations, the candor and effective advice provided by AEX is likely to be helpful and productive for most business owners. Please let us know how we can help with your specific situation.

Ringing Off the Hook

For most business owners, commercial loans, commercial real estate financing and working capital financing have become increasingly difficult to find. It is important for businesses to understand that this does NOT mean that such commercial funding is impossible to obtain — but clearly many of the “traditional” sources for small business loans cannot be relied upon at this time. AEX Commercial Financing Group has written candidly and extensively about what commercial borrowers can do to effectively resolve this serious problem. The urgent need for viable business finance funding has caused most business borrowers to actively seek alternative sources for their business financing requirements. There is probably no better indicator of the current state of the economy than to merely report that our phones have begun to sound like the proverbial “phone ringing off the hook” (although we would also like to think this is a practical measure of being good at what we do).

In the spirit of “We’re all in this together”, AEX has reduced fees for most commercial financing programs. As I have always done, my decision to ask for a fee of any size will be based on first having a conversation with a prospective commercial borrower that gives me a comfort level indicating we are likely to be helpful in their funding efforts. If you are interested in discussing whether we can help with your specific situation, I recommend a short phone conversation at your convenience so that I can learn more about your business.

If you have not already reviewed the advice provided on our main website or in The Working Capital Journal, I recommend that you read firsthand what AEX has published about the difficulties currently being experienced with working capital loans and commercial mortgage loans. As we have emphasized, business cash advances (using credit card receivables) have been less impacted but still involve some problem areas (which CAN be effectively avoided).

The Bottom of the Ocean

Having worked with small business owners involving their working capital financing and commercial real estate financing for many years, it is remarkable to see how differently the public is suddenly treating the banking industry. Most of the negative public perception is being properly directed at banks like Bank of America, Chase and Citicorp (which collectively have already absorbed hundreds of billions of dollars in federal bailout payments and loan guarantees). Even bank employees seem to feel this way — when a woman working for Chase in New York lost her job a few weeks ago, she described her new and profound relief at not having to tell people that she worked for Chase Bank.

I recall hearing the following joke about 20-30 years ago — What do you call 10 lawyers on the bottom of the ocean? … A good start. Now just substitute “bankers” for “lawyers” and you will have a good representation of how far bankers have fallen in the public eye. It does appear that bankers have become the new lawyers in terms of public anger and ridicule directed toward them. I’m sure that this (rightfully) angers the many bankers who have done absolutely nothing to deserve this — if I can make one suggestion about how the good guys remaining among the banking crowd can help improve their standing, here it is: it would probably help if the “good” bankers were a little more candid in their criticism of the “bad” bankers. I for one find it personally objectionable that even the Secretary of the Treasury (a banker to the core) has publicly said little, if anything, suggesting that bailout funds have been used irresponsibly by the Masters of the Universe that caused the economy to implode in the first place. To update the Ronald Reagan quote about government solving problems, the current perspective might be — “Banks are not the solution to our problem. They ARE the problem.”

Dead Banks Walking

For any business owner needing a commercial loan or working capital financing, the concept of "Dead Banks Walking" should prove helpful. This description was used very accurately by the Nobel Prize winning economist Paul Krugman (New York Times, 1-18-09, article entitled "Wall Street Voodoo") when he recently noted that many banks have essentially already gone broke (based upon a true net worth assessment that recognizes that many of their assets are either worthless or at least worth well below the values reflected on their books).

This observation most certainly calls into question why the government should be throwing money at these “zombie banks” (a term also used by Mr. Krugman) in the first place. But perhaps of equal importance, this viewpoint also offers small business owners some insights as to how they should select a potential source for their future commercial financing activities. Not only have most of the largest banks in the United States been shown to be worth even less than General Motors or Merrill Lynch (or Lehman Brothers — which is already in bankruptcy), but they have also almost universally shown the worst business judgment imaginable in terms of how they spend money and make loans.

This is NOT behavior which should be rewarded by astute business owners when determining which bank deserves their business. You CAN do better! Fortunately AEX Commercial Financing Group is aware of several banks that are very visible exceptions to the “Dead Banks Walking” metaphor. Please contact us for a candid discussion about how to eliminate “zombie banks” from your future business finance funding.

We're all in this together

AEX Commercial Financing Group was helping with business finance funding difficulties well before the current financial crisis was recognized by most lenders and commercial borrowers. If anything, we are now increasing our efforts to assist small business owners with the growing challenges involved when seeking new commercial loans or refinancing existing working capital loans. As these challenges evolve, AEX is committed to helping in any way that we can.

In the Working Capital Journal and elsewhere, we have written extensively that so far only a small number of financial companies appear to be acting as if they truly understand that “We’re all in this together” — a special concern that we have is that the largest banks (essentially those receiving federal funds recently to assist with their troubled financial operations) are NOT acting in this manner at all. This has resulted in two major problems for commercial borrowers: (1) the banks receiving bailout funds have failed (so far) to resume a normal lending pattern for commercial finance funding (even though the funds have supposedly been provided to do just that, and these same banks seem to be unable to report to anyone how they are in fact spending billions of dollars); and (2) to make matters even worse, most of these banks are actually REDUCING their business loans and commercial real estate loans by recalling outstanding loans or cancelling business lines of credit.

The good news to emerge from the irresponsible commercial lending activities of many banks: this has made it easier for most business owners to decide who they want to do business with in the future — namely those business lenders who are currently acting as if “We’re all in this together”. AEX Commercial Financing Group would be happy to discuss with commercial borrowers more specifically which commercial lenders have been acting like responsible corporate citizens and business neighbors (and which ones have chosen “the dark side” and should therefore be avoided for all future business financing).

Credit Card Financing

The use of credit card financing usually refers to business cash advances in which working capital is obtained by business owners based upon future credit card processing activity. What we want to highlight here is the increasing use of personal credit cards by small business owners to obtain operating cash for their business. As we have reported in the Business Loan Help section of The Working Capital Journal, because many lenders have suddenly reduced or cancelled business lines of credit, small business owners have increasingly been forced to rely on cash obtained via credit cards to sustain their businesses. We strongly urge all commercial borrowers to review our discussion entitled “Credit Cards — Predatory Lending at its Worst” in order to prepare for some undesirable actions being taken by many lenders which have a substantial credit card loan exposure.

Working Capital Loans

Working capital loans are currently available from an admittedly shrinking number of commercial banks, and most of these lenders are not among the relatively small group of larger banks which have received bailout funds. This specialized business finance funding is primarily limited to businesses which are showing a net profit based on recent financial statements and are current in their loan payments. If these two conditions are met, new commercial loans can usually be obtained to refinance lines of credit and term loans which have been cancelled or recalled by many lenders. For businesses which would not qualify for business financing using these two specific criteria, we can explore alternative funding sources such as business cash advance programs. Please contact AEX Commercial Financing Group for immediate help in identifying effective sources of commercial finance funding for both working capital and commercial real estate financing.