- Business and Employment
Commercial Loan Questions
Commercial Loan Solutions and Questions
Commercial loan problems are often avoidable when dealt with directly and quickly, and this process becomes much more successful when commercial borrowers ask the right questions. To achieve commercial loan success, there are a number of factors that deserve to be looked at more closely by all business owners. I have highlighted many of those issues in this article.
I have been writing about commercial loan problems for many years. Unfortunately, I have seen the business lending environment continue to deteriorate.
What should I do if my bank says no?
Small Business Loans
Banks Are Saying No Much More Often
A critical question that business owners should ask at an early stage (before seeking business financing): "What should I do if my bank says no?" Business owners should anticipate that they will encounter "No" more often in almost all small business loan circumstances.
There will also be creative variations of "No" that have the same impact for small businesses. One example of this is when a banker keeps delaying the commercial loan process by asking for "just one more thing." Perhaps it involves taking a closer look at financial statements or looking at tax returns. These are just two of several tactics when a bank is looking for a reason to say "No." Even if they never get around to actually saying "No," the absence of "Yes" over a prolonged period is one of the worst possible outcomes because of how it delays funding so unpredictably.
When faced with an existing lender that fails to provide needed working capital or commercial real estate financing, small business owners should proceed without delay to obtain practical financial help and solutions from new sources.
Commercial Loan Questions?
The importance of questions is a key focus of this article. "" is a superb book that illustrates the critical value of questions in everything that we do. If you want some help in influencing others, winning new business or building relationships, please do yourself a favor and read this practical and candid guide. Power Questions
If you are not already asking questions about your current business financing and communications strategies, you should resolve to start.
After the 2008-2009 financial bailout, are banks still failing? Are there really any good banks still operating?
Based on events which have occurred recently, "Yes" is an appropriate answer to both questions. But recognizing the difference between bad banks and good banks is not an easy task. There continue to be ongoing reports from the Federal Deposit Insurance Corporation about bank failures.
Just because a bank is still operating does not mean that it is in sound financial condition or that it is actually making commercial loans to small businesses. There are many "Zombie Banks" and "Problem Banks" that are not likely to be productive funding sources.
A Smart Strategy: Improving the Bottom Line
Some More Questions to Ask
- Is my bank a good bank or a bad bank?
- Should I fire my banker?
- Is working capital or commercial real estate financing available anywhere for my business?
- Should I explore how to reduce business debt instead of increasing business debt?
- How can financial negotiating help reduce operating expenses?
Why are banks saying "No" more often?
One Small Business Finance Strategy to Consider - When Banks Say "No"
Using credit card receivables is a commercial financing option that should be considered by small business owners when other practical small business finance alternatives have been eliminated. In other words, it should be viewed as a "Plan B" or "Plan C" and not as "Plan A." Having said that, small businesses should realize that choosing a "Plan B" will be increasingly necessary in the current working capital financing and commercial real estate loan climate. Credit card receivables factoring is available to virtually any business that accepts credit cards in their business transactions (although home-based businesses have more limited access to this kind of commercial financing).
The current volatility in working capital financing options has changed how business cash advances should be evaluated by small business owners. Here are three of the key factors behind the rapidly-changing funding environment for small businesses:
- Unsecured lines of credit have all but disappeared for many commercial borrowers.
- Most banks are now requiring more collateral for business financing.
- Many regional and local banks are exiting all business lending activities.
Recognizing When It Might Be Necessary to Say "You're Fired" to Your Banker
For prudent commercial borrowers, firing your banker and your bank has become both a more acceptable and necessary solution when your business is not able to obtain sufficient business finance and working capital help.
Poll Question: Have You Fired Your Banker (or Thought About It)? - A Poll About Firing Your Banker
Because of the importance and relevance of the topic, I have talked about firing your banker both in this article and numerous other reports. Now I would like to hear from readers about their own experiences and opinions.
Have you considered firing your bank and/or your banker, either for yourself or your business?
One More Thing
- A memorable line from the movie "Galaxy Quest" is "Never give up! Never surrender!" This is an attitude that small business owners will need to adopt if they are to survive the current commercial loan maze that exists for working capital and commercial real estate financing. When your bank says "No," that should not be the end of the story. To illustrate this, I have prepared the following table that includes eight candidates for business negotiating — roughly half of them impact commercial lending.
Opportunities to Negotiate Better Terms
Commercial mortgage loans
Working capital financing
Marketing and sales expenses
Business loan refinancing
Legal, accounting and financial fees
Supplier agreements and manufacturing costs
Credit card processing fees
Some Things Do Not Get Better As Time Passes
There are many adages describing things that get better with time (such as wine). With many problems it is often hoped that "Time will take care of things" (this is an especially popular perspective when nobody knows what to do about something).
But not everything improves with age. One relevant example given the topic of this article is possibly the banking industry. If this seems like a harsh observation, just try to answer the following question candidly:
Using whatever standard you choose, do you think that banks have gotten better or worse during the past 15 to 25 years?
My own answer: I have been working with banks on behalf of small businesses for over 30 years, and my own assessment is that all financial institutions have shown a steady deterioration during that period of time. As with any trend, I can point to exceptions but the list of "good banks" has grown shorter while "bad banks" have experienced a population explosion. Growth like this is rarely a good thing.
Banks are pervasive in the financial economy, so you owe it to yourself to find out as much as you can about the banking industry. ": The Wall Street Takeover and the Next Financial Meltdown" is an excellent book to help you learn more about banks and bankers. 13 Bankers
Avoid Business Writing Problems and Mistakes
A Winning Solution: Reducing Debt and Operating Expenses Instead of Borrowing More from Banks and Other Lenders
Many of the questions and problems associated with commercial loans have a surprisingly simple answer and solution: Borrow less and cut operating expenses. In other words, cut out the "middle man/woman" (commercial bankers) and take back control of your business from external sources like banks. While commercial borrowing might appear to be the "easy" solution and answer to business problems, it is rarely the "best" strategy. This is also a timeless strategy and works as well in 2017 and beyond as it did in 1990 or 2008.
It is our choices... that show what we truly are, far more than our abilities.— J.K. Rowling
© 2006 Stephen Bush