The Working Capital Journal

Guerrilla Financing Tactics -

Survival Guide for Working Capital Loans and Commercial Mortgages

Although the suggested actions in this article might be seen as a last resort to be undertaken only when all else fails, in reality these suggestions should probably be considered by most commercial borrowers in the early stages of their commercial financing search due to the growing failure of banks to provide a normal level of business funding. The necessity of resorting to guerrilla loan tactics has been accelerated by the decreased performance of commercial banks in providing effective small business finance programs. Hopefully this report will serve as a short survival guide for business owners when they are seeking working capital loans and small business loans.

Business Consulting as a First Line of Defense

To put it succinctly and candidly, the current commercial lending climate is no place for amateurs when dealing with more complicated commercial loan programs and banks which predominantly are not functioning in a normal manner. The use of business consulting and a commercial finance expert should be considered as one way for business owners to overcome a substantial information gap. A business consultant experienced in the ways of overcoming small business loan problems is a pragmatic solution to a situation that most commercial borrowers would admittedly prefer did not exist in the first place. A business consultant with an appropriate level of expertise will normally require a business owner to pay a reasonable fee for their specialized services. This professional cost will typically be justified when compared to the potential financial damages if specialized help is not acquired.

Determine Whether Your Bank is a Good Bank or a Bad Bank

We have published a separate report about the growing need to determine if a commercial bank is a good bank or a bad bank. The most practical gauge for defining whether a bank is good from a small business owner perspective will often be guided by whether the needed commercial loan can be provided or not. Although banks have been broadly proclaiming that they are providing a normal level of commercial funding, in reality there are multiple reports indicating otherwise. An experienced business finance consultant can serve as a valuable resource based on their advanced knowledge of which lenders are truly active in making working capital loans and commercial mortgage loans. If a particular bank is in fact not providing commercial loans as usual, it certainly might be because they do not have sufficient resources to do so. While this bank might not feel they deserve the bad bank label, our perspective is that results count. On the only scorecard that matters to most commercial borrowers, the small number of good banks will gradually become obvious based on their healthy business lending habits. Business owners should not be surprised to discover that they need some professional guidance in finding the good banks and avoiding the bad banks.

Be Prepared to Fire Your Bank and Your Banker

For small business owners, the idea of firing their banker has perhaps not occurred to them yet. Most businesses would probably like to think of their banker as one of the family. But with a guerrilla business loan perspective that is appropriate in the midst of banking chaos currently seen almost everywhere, small business owners must increasingly look out for their own best interests because it is unlikely that their banker is up to the task anymore (even if their commercial banker is their best friend). One of the most predictive signs that a commercial borrower might need to fire their banker is an escalating number of times when their commercial banker is unable to achieve the results which were originally offered or discussed.

Business Cash Advances and Other Options for Working Capital

For small businesses to survive in an erratic economy, the use of guerrilla loan tactics means that some small business finance options which borrowers previously ruled out because they were considered too complicated (or too expensive) might deserve a second look. A key example of a commercial financing strategy which has frequently been a Plan B for many merchants but often not utilized in their final choice for acquiring more working capital is a business cash advance program (often referred to as credit card factoring). With a sudden reduction in business lines of credit and an increased requirement for collateral by many commercial lenders, the use of credit card processing to obtain working capital financing now has more practical appeal for the typical small business owner who needs more cash for their daily operations.

Because business cash advances are not available or practical for all small business owners, it is critical to note that there are also important NEW working capital management options that are proving to be both reliable and cost-effective. One option offered by AEX Commercial Financing Group is less costly than business cash advance programs and in many cases provides a longer term for the working capital loan. Furthermore, one of the disadvantages of merchant cash advances is that they can be used only by business owners accepting credit cards from customers. The new short-term working capital program from AEX is available to businesses which are paid the "old-fashioned" way (cash and checks!) — additionally, this short-term commercial loan program is available to businesses which primarily accept credit cards.

More Guerrilla Tactics for the Small Business Survival Guide

This brief discussion was intended to illustrate the importance for small business owners doing whatever it takes to survive in a tough business climate. In addition to the guerrilla financing tactics described above, there are several other important small business loan options which should be considered by commercial borrowers before finalizing their commercial loans, SBA financing or commercial mortgages.

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