Business Finance Funding

As we have noted repeatedly, one of the most effective commercial finance funding strategies has been credit card financing programs (which provide cash based on projected future credit card processing activity) during the recent financial chaos. We have published a practical overview of this successful working capital financing approach which can be accessed by clicking on the link entitled “Summary: Business Cash Advances” in the right-hand column of The Working Capital Journal. Included in the summary are 10 problems which should be avoided with credit card factoring (An important note: AEX Commercial Financing Group has eliminated all 10 of these problems from their Business Cash Advance Program.)

Commercial Finance Funding

Business finance funding has changed significantly during the past few weeks. An important change issue for commercial lending: there are both apparent changes and real changes because there have been so many inaccuracies about the availability of commercial finance funding. Commercial borrowers are left with little choice but to adapt to the changing environment for commercial mortgages and commercial loans. Another key change issue for commercial mortgage loans and commercial financing is simply the likelihood that more changes will be forthcoming in the near future. Small business owners should consult with a working capital loans expert to adequately prepare for both current changes and future changes that might occur. An effective strategy for coping with the primary changes involving fewer lenders, increased collateral requirements and fewer unsecured credit lines is the use of business cash advances based on future credit card processing.

Business Cash Advances

Business Cash Advance and Credit Card Processing Executive Summary:
AEX Commercial Financing Group has prepared a practical and concise executive summary about business cash advances (also referred to as credit card receivables financing, credit card factoring and working capital advances). Topics include (1) five reasons for obtaining a business cash advance based upon credit card processing activity; (2) ten problems to avoid with a working capital advance; (3) six criteria for credit card receivables financing up to $300,000 (and higher as appropriate); and (4) why AEX strongly advises that business owners avoid the use of online commercial finance applications for both merchant cash advances and other business financing.

Business Cash Advance Changes

The current chaos in commercial financing has changed how business cash advances are being used by most businesses. While there are still other working capital management choices which should be considered, the harsh reality for most business owners is that effective options to get operating cash quickly have changed.

Three of the factors behind the rapidly-changing commercial funding environment for small businesses:

(1) A growing number of banks (especially local and regional banks) have chosen to sit on the sidelines for a while with their business lending activities.

(2) Unsecured lines of credit seem to have vanished for most small businesses.

(3) Banks are demanding more collateral for business financing.

On balance, the three changes noted above have significantly INCREASED the positive arguments in favor of the AEX Business Cash Advance Program.

Commercial Loans - Plan B Contingency Planning

Contingency planning (having a “Plan B”) can frequently help small business owners avoid problems. But for commercial loans, there is often inadequate attention paid to working capital contingency plans and what can go wrong with business financing.

For example, a substantial number of local banks have already pulled the plug on future commercial financing. In most instances, very little advance notice was provided. If a business has commercial funding with a regional lender, a Plan B should be formulated for the contingency that alternative financial arrangements could be needed in the near future.

There are other examples like the one noted above which will also demonstrate the critical value of why commercial borrowers should “Always have a Plan B”. Two of these situations involve business cash advance programs and SBA loans. Please contact AEX Commercial Financing Group for a personalized conversation about how these or other possibilities might apply to your business.

Commercial Financing - Avoid Online Applications

By submitting an online business financing application, business owners will generally be providing confidential information to a lender before it is appropriate. There are numerous business cash advance and commercial loan sites that urge borrowers to fill out an application before a business owner even has a conversation with a potential lender. AEX does not make such an application available on our websites, and there are many reasons that we have adopted this policy: “A business owner will not be asked to submit any application until they have completed a thorough discussion with AEX Commercial Financing Group confirming that working capital financing is feasible for their unique business situation.”

There are several key problems associated with an online commercial finance application, and we have written extensively about them. One issue is that most commercial loans are simply too complex to initiate by an oversimplified automated process. Beginning the business loan process with an automated application is like the kickoff of a football game occurring without any coaching pep talks, pre-game warmups or even a coin toss. The apparently easy approach omits too many preliminary steps that are essential.

Working Capital Management

The analysis of working capital for a business traditionally focuses on short-term cash flow and liabilities, but prudent working capital management should also evaluate the balancing of short-term and long-term debt. In terms of debt management choices, short-term working capital financing options are not always adequately considered by business owners due to a common preference for long-term business financing. Even thriving businesses frequently need more cash than they can borrow from a bank. There are some important short-term commercial financing strategies that are usually more effective than long-term business finance strategies in producing cost-effective working capital funding results for business owners. Two of the most overlooked short-term strategies are business cash advance programs (using future credit card processing receipts) and short-term commercial real estate loan programs.