When to Fire Your Commercial Lender

Since the banking meltdown, most of us are now reluctantly admitting that banks and other commercial lenders are just not the same. In a manner similar to many automobile manufacturers that are now a tarnished and shriveled version of what they once were, it seems like almost overnight most commercial banks and small business lenders have lost our confidence. In this shifting reality, business owners are now forced to adapt quickly to a changing environment for small business loans. Candidly speaking, even if a business lender is their best friend, small business owners are increasingly realizing that they must look out for their own best interests because it is unlikely that their commercial lender is up to the task anymore.

As if we needed to be reminded that business lending is on life support (lenders and politicians are not likely to ever admit this publicly), the largest small business lender in the country has recently sought bankruptcy as the solution to their own serious problems (CIT Group). Firing your commercial lender has become both a necessary and more acceptable solution when your business is not able to obtain adequate business financing from existing commercial lending sources. We have published a report to help highlight some of the issues for this critical problem. Please see the right-hand column of The Working Capital Journal for a link to this candid assessment about "Firing Your Banker" or other ineffective business lenders.

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).

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 Loan Decisions

In making commercial financing decisions, it is becoming increasingly important for small business owners to understand what their realistic and effective options are at an early point. Especially in the midst of recent chaotic conditions impacting commercial loan markets, this is not an easy task. There are harsh realities to be confronted by most businesses when honestly evaluating their practical alternatives for business financing in today’s challenging commercial funding climate. A key ingredient in this process will be a lengthy discussion with a commercial finance expert (such as AEX Commercial Financing Group) that will not hesitate to provide candid advice and timely help.

Commercial Real Estate Loans

Commercial mortgages now include a new set of problems to overcome for commercial borrowers. One of the major new complications appears to be determining which commercial lenders are still capable of making commercial loans of any kind. Once an effective business lending source is located, some potential obstacles to successful commercial real estate financing remain unchanged. Business income remains a key ingredient for assessing the financial health of a business and will ultimately have an inescapable impact on the appraisal of business value needed for commercial mortgage loans. In the increasingly uncertain commercial funding climate, candid and practical advice from a business financing expert (such as AEX Commercial Financing Group) is likely to be an especially critical component of an effective borrowing process for small business owners.

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.