We Are All In This Together – Working Capital Loans

there are certainly conflicting reports, numerous financial observers have expressed concerns that the biggest commercial banks (those receiving government funds to help their troubled commercial financing operations) are not lending normally and acting as responsible corporate citizens. In financial publications such as the Working Capital Journal, there have been candid accounts that only a small number of commercial lenders appear to be acting as if “We’re all in this together”. 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. These same banks also seem to be unable to report to anyone how they are in fact spending billions of dollars. (2) Many banks are decreasing their commercial loans and commercial real estate loans by recalling outstanding loans or cancelling business lines of credit. There has already been much public backlash in reaction to inappropriate banking bonuses and spending. So far that has primarily taken the form of criticism and questions about how banks are allocating the financial resources largely subsidized by the taxpayers providing bailout funding. As it becomes more obvious that the action of many banks is impeding the recovery from economic chaos, it is likely that most business owners will choose to obtain their business finance funding from a lending source that has helped rather than hindered financial recovery efforts. As always, business owners cannot typically afford to wait for government and external action to resolve problems like those described above. Given the facts that many banks have exited or reduced commercial lending activities, business owners should attempt to find alternative sources for working capital loans and commercial loans. With appropriate help from a commercial financing expert, commercial borrowers will be able to identify which commercial lenders have been acting like responsible corporate citizens and business neighbors. It is unfortunately common to find that most bigger banks have eliminated new working capital financing and commercial mortgage loans. Although they are proving to somewhat difficult to identify and locate, there are commercial lenders actively making new commercial loans. In addition to the larger banks reducing most lending programs, another difficult commercial financing situation is that very few of the smaller local banks have resumed prior business loan activities. In many cases this means that a normally reliable and familiar source for working capital loans is no longer a viable business funding option. For the most part, local and regional banks simply do not have sufficient capital for new commercial loans. Many commercial borrowers will discover new financing choices such as business cash advance programs as well as alternative funding choices. Under most circumstances, business cash advances are provided by business lenders other than commercial banks. Such a working capital funding source might increasingly prove to be more reliable than traditional banks of any size in providing commercial financing effectively. By looking for lenders displaying an appropriate attitude of “We’re all in this together”, business owners should hopefully find that their business financing circumstances will improve.

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