Effective and Realistic Small Business Finance Options

by Stephen Bush

It is of critical importance that small business owners assess their most effective and practical options when facing small business finance decisions. This will not be an easy task in the face of recent volatile conditions impacting financial markets. An example of the current problem is depicted by excessive confusion and misinformation about working capital and small business financing availability. Getting more accurate information about what is realistically possible can be one of the most difficult challenges for commercial borrowers.

Even for business owners who are satisfied with their current commercial loan and working capital loan arrangements, it is advisable to explore commercial financing options that might be necessary if economic conditions change further. A valuable tool to help small business owners in this process is the use of contingency financing and Plan B strategies.

There are a number of harsh realities which must be confronted by all commercial borrowers when assessing their realistic options in the current challenging working capital financing climate. There are at least five key factors to consider in terms of an immediate impact on most commercial financing. In the first example, we are seeing that lenders are eliminating commercial lines of credit for many small businesses. For a second factor, commercial construction financing currently has a very limited availability. Thirdly, lending activities involving small business financing and commercial mortgages have been stopped by many local and regional banks. As a fourth example, additional small business loan collateral is being requested by most commercial lenders. As a final example, extensive difficulties will be experienced by businesses which are not current in their debt payments or are not showing a current profit.

The primary message of this report is to emphasize the importance for commercial borrowers of being more realistic when seeking new financing or refinancing. As noted above, there are some stark changes which now impact almost all new working capital loans and business financing. While it is probable that either the kind or terms of financing will differ from previous small business finance arrangements, most small business owners will be able to obtain financing despite these difficult new obstacles.

As an example, short-term working capital loans are still available. Since some of the largest providers have stopped making these business loans, the main change for business borrowers is the likelihood that they will be dealing with a different commercial lender. It should be noted that the most capable working capital lenders are not actively marketing this particular service.

Business cash advance programs which are based on credit card processing activity are another example of an increasingly practical commercial financing option in the midst of an uncertain economy. This small business finance option has not been widely utilized by businesses even though it has been available for several years. A business cash advance should be considered as a practical choice for business cash flow improvements for most businesses accepting credit cards from their customers.

Because of the current shortage of effective small business finance possibilities, it is advisable to determine whether there are realistic options for a particular business by contacting a commercial loans expert who is familiar with business financing throughout the United States — it is highly preferable to have detailed discussions with a commercial finance advisor who can address both specialized working capital management strategies as well as commercial real estate loans and other small business loans.