Under most normal circumstances, commercial borrowers
should avoid online applications for business loans and
business cash advances. Commercial borrowers should avoid
submittals of any application forms until after
individualized lender discussions. This working capital
management article will provide an overview of how and why
to avoid the usual online application trap involving
commercial loans.
Business owners and commercial borrowers will consistently
find an almost limitless supply of internet sites for
commercial loans. Most business cash advance websites will
include some version of an online application. Here is a
four-step process for avoiding the unwise use of
applications for business loans.
The first step is to avoid the initial temptation to submit
a commercial loan application online. It does appear to be
convenient for a business borrower to apply for business
financing online. Perhaps some business owners are
attracted to the anonymous nature of the online business
finance application because they have been previously
annoyed by sales tactics and evasive answers in loan
discussions.
Many commercial lenders have contributed to the
pervasiveness of online business finance applications in
large part because they are fearful of losing some
competitive advantage by not having this capability.
However in attempting to match their competition, business
lenders and brokers are sacrificing the best interests of
their commercial borrower clients by facilitating the
online application approach for commercial loans.
The second step is to understand why it is essential to
avoid an online business finance application. Submitting a
commercial loan application via a website is equivalent to
blindly sending a resume to a company seeking employment
without any prior discussions or research. What makes an
online business loan application even more risky and
inadvisable than the anonymous resume example is the usual
inclusion of tax identification numbers and other sensitive
business data on a commercial funding application document.
There are several key problems associated with an online
business finance application. First, there are always
potential security breaches during transmission (as well as
before and after transmission). Second, there is a
significant loss of control by the commercial borrower in
the use of their social security number or business tax
identification number for checking credit (since many
online business finance application processes will result
in checking credit before any personal conversations
occur). Third, most commercial loans are simply too complex
to initiate by an oversimplified automated process. If we
can use a brief sports analogy, starting the commercial
mortgage loan or business cash advance process with an
automated application is tantamount to the kickoff of a
football game occurring without any pre-game warmups,
coaching pep talks or the traditional coin toss. The easy
and convenient approach simply omits too many preliminary
and essential steps.
The third step is to replace an online business loan
application process with a better approach. The simple and
pragmatic solution to the business finance application
dilemma is to insist on preliminary personal discussions
with an experienced advisor before submitting any form of
commercial finance application. A suitable and ethical
commercial lender will not ask a commercial borrower to
submit any application until the borrower has completed a
thorough discussion with the lender confirming that
business financing is appropriate for a specific business
situation.
Of course it should be anticipated that some commercial
lenders and brokers will attempt to minimize the potential
problems associated with an online business finance
application. Instead of dealing with such a business
financing advisor, commercial borrowers should seek out one
of the relatively few commercial loan advisors willing to
emphasize a conversational and individualized approach to
commercial funding for a business owner.
The fourth step is to explore additional resources that
will facilitate a better understanding of complex business
finance issues. The Commercial Real Estate Loans Guide and
The Working Capital Management Guide are two examples of
business financing resources that will provide strategies
for many problematic circumstances dealing with small
business cash management.
----------------------------------------------------
Steve Bush is a small business loans expert - learn how to
avoid mistakes with commercial loans and find out about
business cash management strategies at AEX Commercial
Financing Group =>
http://aexcommercialfinancing.com
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