- Business and Employment
Small Business Financing Help
Help for Small Business Finance
I designed this overview to provide candid, practical and timely small business financing help for commercial borrowers. While such assistance is often needed by small business owners, the process of finding reliable commercial finance help is frequently difficult.
A big part of finding effective business finance help is asking the right questions and acknowledging that specialized assistance might be required. It will also usually prove to be both timely and prudent if small businesses find commercial loan help before it is actually needed. This requires finding or preventing problems before they get out of hand. I didn't say this was going to be easy!
Small business financing problems need to be anticipated at an early point.
FAQ - Small Business Financing
Asking the Right Commercial Finance Questions
With most small business financing situations, there is usually a practical need for problem-finding as well as problem-solving. With the recent banking chaos, the importance of finding the commercial lending problems has assumed a new level of importance because there is now a new set of commercial financing difficulties to be confronted by small businesses. Unfortunately these problems are typically not obvious to the average commercial borrower.
A good starting point when seeking help is to ask the questions that matter the most. These might include questions like the following:
Some Questions Small Business Owners Need to Be Asking about Commercial Lending
- Should I fire my banker?
- Are there really any good banks left for commercial lending?
- Are working capital financing and commercial mortgage loans actually available to small businesses from any business lenders?
- What should I do when my banker says "No" to a very routine request?
- Are banks still failing even after the financial bailout?
- Are banks required to provide small business lending after they were given taxpayer funding by the financial bailout several years ago?
- What should I do if my banker says "Yes" but offers loan terms that seem outrageous?
Needing help and finding help are two extremely different concepts. This is particularly true for small business owners seeking assistance with their commercial finance needs. Small business financing help can take several forms. One effective source of viable alternatives is an expert small business finance consultant. This avenue will be even more helpful when it comes to evaluating banking options.
Small Business Financing Has Become More Difficult to Obtain
Business financing has always been more complicated than it seems, but the difficulty has entered a league of its own during the past 10 years. The need to understand and analyze the commercial lending process has clearly been elevated to a new level of importance for small business owners.
Bailing Out Banks Instead of Businesses
The need for bank bailouts first became evident in 2007-2008, with actual legislation designed to help banks initially passed in the fall of 2008. This had already been preceded by the total collapse of several investment banking firms that included Bear Stearns and Lehman Brothers. The Troubled Asset Relief Program (popularly referred to as TARP) was designed to provide emergency funding to several hundred banks, and about 707 financial firms initially received bank bailouts.
While it has been widely reported that some banks have paid back all of the TARP funds, there are still banks operating which have not yet done so (and this generally has not been covered by the media). By the way, it has been suggested by multiple sources that many of the banks that have repaid TARP bailout funds did so primarily to escape onerous restrictions on executive compensation rather than because they were suddenly in healthy financial condition.
Admitting that a Commercial Financing Problem Exists
An especially difficult but nevertheless important aspect of the process is for a small business owner to come to a full realization that they need help in the first place. If you do not feel there is a problem, it is highly unlikely you will spend much time seeking out a solution!
One of the most significant changes to small business financing during the past several years has been the extent to which (most) banks have stopped many traditional forms of working capital financing and commercial real estate loans to small businesses throughout the United States. This development is closely tied to an increasing number of "Zombie Banks" and "Problem Banks" that now have limited financial resources for normal commercial lending.
A "follow the money" mindset: borrowers should not hesitate to ask a business lender for detailed information about their actual commercial loan activity with small businesses during the past several years.
Warren Buffett on Managing Small Businesses
Working Capital Help
Very few aspects of small business financing are more perplexing than working capital management. Here is some excellent help for reducing the confusion.
The future financial health of most (if not all) small businesses depends on how successfully small business financing is handled. This certainly includes critical points such as finding adequate commercial loans when they are needed and keeping loan costs under adequate control. But a key aspect that might be overlooked (for many good reasons) is resisting the need to seek help before it is actually required. The need to anticipate commercial finance problems at an early point is a major key to the ultimate success of any help.
How to Improve Bank Loans
An important part of commercial bank consulting is to identify one or more candidates qualifying as a good bank if a small business is currently using what is deemed to be a bad bank and still needs an ongoing commercial banking relationship in some form. In the end all that is really needed is just one bank that meets specific business requirements. In a dose of reality, only a few good banks can pass the test for final consideration when a new business bank is selected based upon specialized and unique small business finance criteria.
Not to be overlooked in the search for financing options is the feasibility of reducing business debt and operating expenses.
Are These Temporary Problems?
Such Changes Are Usually Permanent
When changes are as drastic as the ones we have seen throughout the banking industry during the past few years, there is a very low probability of a return to "The Way We Were" just a short time ago. The same is true with other industries such as automobile manufacturing. Does anyone expect that General Motors is going to resume making Saturn vehicles after the dust settles?
If we listen to the banks and their lobbyists, you would think that nothing serious has happened and very little has changed. This is not true!
The financial problems for small businesses are not likely to be temporary. In other words, anyone hoping for the most serious difficulties to go away on their own simply due to the passage of time is likely to be severely disappointed. So the prudent strategy is to eliminate, solve or prevent the problems at hand.
Excellence is an art won by training and habituation. We do not act rightly because we have virtue or excellence, but we rather have those because we have acted rightly. We are what we repeatedly do. Excellence, then, is not an act but a habit.— Aristotle
© 2009 Stephen Bush