"Thinking Outside the Bank" means that non-traditional
(non-bank) commercial lenders should be considered for most
commercial mortgage loan and working capital financing
situations. Traditional lenders providing competitive
commercial financing for special purpose commercial
property loan and business cash advance needs are
relatively rare.
When commercial borrowers "Think Outside the Bank", it is
of critical importance that they are prepared to avoid a
wide variety of problematic traditional as well as
non-traditional commercial lenders in their search for
viable business financing, especially when it involves
business cash advance (credit card receivables and credit
card factoring) programs, credit card processing services
and commercial real estate financing.
In order to take advantage of "Thinking Outside the Bank",
commercial borrowers need to realize that they have more
commercial loan options than they think. These business
financing options are referred to here as "Thinking Outside
the Bank" because most commercial borrowers believe that a
bank is the best source for a commercial loan.
Here are two brief examples about how a commercial borrower
is likely to benefit by "Thinking Outside the Bank". In
many situations a traditional bank will provide a
commercial mortgage but will include non-competitive
covenants and terms. In other cases a traditional bank will
decline the business loan because they do not provide
commercial financing to the commercial borrower's
particular type of business.
Some borrowers are likely to feel that a traditional bank
is their best source for a commercial mortgage or
commercial loan. However, because most traditional banks
focus on a small number of established industries,
non-traditional (non-bank) and non-local commercial lenders
should be actively considered for most business financing
situations. Therefore the recommended business loan
strategy (as discussed in this article) is to "Think
Outside the Bank".
As described in a prior commercial loan report, in many
business financing scenarios it is typical for a
traditional bank to require more business loan covenants
than would normally be seen in a competitive commercial
mortgage situation. Traditional banks can unfortunately
take advantage of a shortage of commercial lenders in their
local market area.
An effective response by borrowers is to emphasize business
financing options other than the traditional ones. It is
not wise for business borrowers to depend only upon local
and regional banks for commercial loan possibilities. For
common commercial financing circumstances, a non-local
business lender can frequently provide the best business
loan terms because of competition with other business
lenders.
There are three business loan scenarios in which borrowers
will commonly discover that non-traditional lenders will
offer terms that are better for the business owner:
commercial real estate financing and SBA loan programs,
working capital business loan programs and business
management programs for credit card processing.
Two of the worst commercial real estate financing problems
for business owners can be eliminated by "Thinking Outside
the Bank". The first commercial mortgage business loan
problem is the typical bank practice to eliminate most
special purpose business properties such as golf courses
and funeral homes from their lending portfolio.
A second business loan possibility is the frequent practice
of many commercial banks to add recall and balloon
conditions to their commercial loans. The bank can then
require early payoff of the commercial real estate loan
under stipulated conditions. Both commercial financing
situations can easily be prevented by a non-traditional
lending source.
Many merchants that accept credit cards in their business
will qualify for a merchant cash advance with credit card
factoring. A traditional bank will usually be a poor source
of help if a business needs to use credit card financing.
Because even the most successful merchants usually need
more financial resources than they can get from a
conventional commercial business loan, it is essential for
a business to "Think Outside the Bank" and find
non-traditional lenders to coordinate this commercial
financing requirement.
A credit card processing service can be a key function in
improving the bottom line of merchants with high volume
credit card activity. The analysis of credit card
processing providers can be efficiently combined with
credit card receivables and credit card financing.
In coordinating a business cash advance and working capital
business loan program, it is usually possible to achieve
improvements in the business owner's credit card processing
services. Traditional banks are usually not competitive in
providing assistance with a business cash advance using
credit card receivables. So it is likely that a
non-traditional lender will be the major source of help
with these complex business needs.
----------------------------------------------------
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://aexcfgllc.com
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