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.

How to Reduce Small Business Finance Fees

The ability to keep small business financing fees at an appropriate level is the key to financial success for most businesses. However, in the current rugged commercial lending climate, many lenders are taking advantage of the situation and grossly overcharging for their business finance services. Such a greedy mentality by commercial lenders should not be acceptable to any commercial borrowers regardless of their situation.

Here is what we are doing to resolve the situation to the best of our ability: (1) AEX Commercial Financing Group is currently providing free business financing analysis (which is usually more candid, practical and effective than most other sources). (2) AEX is not charging any upfront fees for working capital financing. (3) In addition to eliminating fees for all working capital management services, AEX has also reduced fees for commercial loans and business consulting.

The three AEX actions for reducing or eliminating commercial finance fees are intended to be in the spirit of “We’re all in this together” because AEX Commercial Financing Group recognizes that most businesses are experiencing unusual working capital problems. While AEX will not always be able to provide the specific business financing help that a business owner is looking for, we will usually know if we can be helpful after a brief candid conversation. Our business finance services are available to small business owners located throughout the United States.

New Directions for Small Business Financing Services

Small business financing is heading in a new direction. The journey for small business loans is likely to have all the adventure and uncertainties experienced by a wagon train over a century ago. As historians know, wagon trains often encountered serious obstacles even when they were led by expert wagon-masters. What we are seeing now with commercial financing and working capital loans also suggests that results for commercial borrowers will be confusing, uncertain and painful at times. With commercial loan expert help, small business owners should have better results but should still anticipate unexpected challenges along the way.

One of the key factors impacting the new directions for small business financing is that banks and other commercial lenders have changed so dramatically in a very short period of time. These changes are not expected to be temporary in nature. With multiple bank examples, the new directions for commercial borrowers are not optional or voluntary. In most cases, if business owners do not quickly move in a new direction for their business financing, they will be without reliable working capital financing and commercial loans.

Because commercial lending is extremely competitive, new lenders have emerged to replace the old ones. As business financing moves in a new direction, the banking industry is beginning to resemble other aging industries such as automobile manufacturers. While the similarities are probably not welcomed by many bankers, small business owners will now find that their business finance and working capital financing choices might have improved as a result.

The Bad Banks and Good Banks

We have published "Good Banks - Bad Banks" to help small business owners find the increasingly smaller number of good banks while avoiding the growing number of bad banks. A link to this report can be found in the right-hand column of The Working Capital Journal. As noted in our analysis, commercial borrowers should be prepared to act more aggressively to protect their own financial interests. Each business owner should conduct their own results-oriented assessment of which bank(s) can provide an appropriate level of business financing and working capital help for their unique business situation.

Commercial Loans and Bank Rage

In most situations involving commercial loans and working capital, bank rage is emerging as a practical issue for business owners. A substantial portion of the current bank rage can be attributed to how banks are using their scarce resources. Instead of traditional uses like working capital financing for small business owners and commercial property owners, many well-known banks are paying million-dollar salaries and bonuses to employees who have already taken their employers to the brink of disaster. Typically paying as little as three cents on the dollar in cash and leveraging the remainder with debt, banks which should have known better unwisely invested in multiple varieties of what are now referred to as toxic assets. Realistically most will point out that this is no way to run a bank. Meanwhile, the few remaining good banks have effectively been victimized by the outlandish behavior of the many bad banks. Getting beyond bank rage and subsequently moving forward is a prudent goal for any small business — the most practical solution for most business owners is to determine whether their current banking relationship involves one of the bad banks or one of the good banks.

New Small Business Loan Sources

Some of the most effective new small business loan sources are operating regionally rather than nationally. Realistic commercial loan solutions will depend on a combination of underwriting criteria such as (1) type of financing; (2) business activities; (3) size of loan; (4) business location; (5) length of operating history; (6) cash flow; and (7) debt repayment history. Business owners need to be aware that there are a number of active commercial lenders which are currently making small business loans to businesses. While there are viable solutions and some new commercial financing sources, even the most effective small business financing sources will not be able to help all businesses. However, because many small business owners are being routinely told by current lenders that they cannot provide needed small business loan and working capital help, commercial borrowers should anticipate that new commercial loan sources might be needed.

Refinancing Small Business Loans and Working Capital

Difficulties for refinancing small business loans are occurring frequently with short term working capital financing and long term commercial real estate loans. In some cases commercial borrowers are attempting to secure additional cash, and in other situations they are being forced to refinance an existing commercial loan by the current lender. With either possibility, most small businesses are trying to deal with reduced sales and cash flow, and this makes refinancing business debt both more important and more difficult. Whatever the specific financing situation for a small business, commercial borrowers should be better prepared if they approach the process with a realization that there might not be the usual solutions for refinancing business loans. It is likely that businesses will need to evaluate new commercial lending sources and new business financing programs before the end of their efforts to refinance business debt.

Working Capital Loans

Working capital loans are not currently available from many banks. However, business financing options are emerging to fill the void left by banks which have abandoned commercial lending. To help understand the current shortage of working capital financing, it is increasingly clear that there are at least three major factors underlying the reduced bank lending capabilities for short term capital financing. Although many banks are exiting commercial finance programs, some promising new business funding choices are available. In most cases, small business owners will find the new working capital loan options to be a substantial improvement over previous bank financing. We are finding that more businesses are qualifying for these working capital loans because impractical bank underwriting criteria have been eliminated. There is a short turnaround time for receipt of working capital if a business qualifies for this practical and straightforward business financing program.

Small Business Survival using Guerrilla Loan Tactics

Business owners should review the short term working capital and business loan "Survival Guide" summarizing guerrilla financing options to be considered in the prevailing dysfunctional banking environment. A link to this guide is provided in the right-hand column of The Working Capital Journal. It is increasingly likely that many commercial borrowers will need to aggressively employ guerrilla loan tactics and do "whatever it takes" when seeking business financing required for business survival.

Firing Your Business Banker

Firing your bank and your banker has become both a more acceptable and necessary solution when your business is not able to obtain sufficient commercial financing from current lending sources. We have published a report ("Firing Your Banker") to help highlight some of the issues for this timely subject matter — please see the right-hand column of The Working Capital Journal for a link to this candid assessment.