Commercial Loans and Small Business Financing - What to Avoid

Commercial Loans and Small Business Financing - What to Avoid
The combination of factors noted below can have dire
financial results for commercial real estate loans and
small business loans. Business owners should be prepared
for these real possibilities. It is always advisable to
have an advance understanding of what can go wrong with
working capital financing and commercial loans.

The worst case scenario for small business loans and
commercial real estate loans is not a situation that most
people should want to experience. There are several
elements that we believe will almost always produce this
serious but avoidable result when they are all present
simultaneously. Understanding each of the issues should
enable borrowers to avoid a potentially devastating working
capital financing outcome.

Here are the issues which we believe will usually result in
a worst case scenario for commercial loans if all five are
present: (1) Dealing with an inexperienced commercial
finance advisor; (2) Using a lender which historically has
an unacceptable track record for successfully completing
commercial loans; (3) Obtaining business financing that
includes a recall option for the lender; (4) Inappropriate
and non-competitive business loan terms; and (5) Short-term
financing in which a borrower is not also offered the
opportunity to lengthen to a longer-term period.

Our primary advice is to totally avoid circumstances where
all five factors exist at the same time. A secondary
recommendation is to also seek alternative financing for
commercial loans when either of the first two elements are
present. There are likely to be many working capital
management scenarios where it will be impractical to avoid
all of the issues described in the preceding paragraph.

It is important for business owners to secure commercial
financing which is not impacted by the worst case
conditions. By not taking necessary action before
finalizing commercial loans, business owners will subject
themselves to inappropriate business financing terms for a
very long time. Two points deserve special emphasis.

First, small business loans are more complex than most
borrowers realize. There are a number of additional serious
commercial funding obstacles beyond those noted in this
brief article. Because of this, it is important for
commercial borrowers not to narrowly focus on the factors
included in the worst case scenario discussed here and
simply avoid these specific issues.

A comprehensive approach to working capital management
should incorporate a balanced analysis of both the worst
case aspects and other critical business finance terms. The
importance of this overall perspective is why we emphasized
the critical nature of avoiding both inexperienced brokers
and lenders.

Second, the worst case scenario for business loans
described above is totally avoidable. But to avoid an
obstacle, it is critical that you have a working
understanding of what you are avoiding, what it looks like
and any special techniques required to evade it. For
example, if you are driving a car, it is common sense that
you will not intentionally drive your vehicle over sharp
pointed objects that are likely to puncture your tires.

With commercial loans and commercial real estate loans, the
combination of the five factors noted previously in this
article will typically produce an impact for small business
funding that is equivalent to much worse than simply
puncturing a tire. Unfortunately, without proper advice and
knowledge, most business owners will not be prepared to
recognize the appropriate warning signs for avoiding
business financing hazards.

The primary theme of this article was on a combination of
small business financing problems that typically have
immediate and long-lasting negative consequences.
Commercial borrowers should not overlook the multitude of
other serious problems with commercial loans beyond those
described. As with the circumstances noted above, most of
the other potential difficulties with business loans can
also be avoided.

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Learn how to avoid mistakes with commercial loans and find
out about business cash management strategies at AEX
Commercial Financing Group. Steve Bush is a small business
loans expert =>
http://aexcfg.com