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It is important for commercial borrowers to understand that they have more business loan choices than they are likely to realize. I refer to these commercial mortgage choices as "Thinking Outside the Bank" because the average commercial borrower probably believes that a traditional bank is the best source for a business loan. Non-traditional commercial lenders are increasingly considered to have the competitive edge for a number of commercial mortgage scenarios. 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. Commercial loan borrowers might feel that a bank is their most likely source for business financing. However, since traditional banks usually focus on a few types of businesses, non-traditional business lenders should be emphasized for any business loan situation. Therefore the recommended commercial mortgage strategy discussed in this article is to "Think Outside the Bank". As I noted in an earlier commercial mortgage article, in many non-competitive business loan situations it is not unusual for a local traditional bank to impose harsher business financing terms than would commonly be seen in a more competitive commercial loan market. Such traditional banks routinely take advantage of a relative lack of other commercial lenders in their local market. An appropriate response by commercial borrowers is to seek out non-bank business loan options. It is neither necessary nor wise for commercial borrowers to depend only upon local traditional banks for business financing solutions. For most commercial mortgage situations, a non-local and non-bank commercial lender is likely to provide improved commercial loan terms because they are accustomed to competing aggressively with other commercial 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: (1) commercial real estate financing programs; (2) working capital business loan programs; and (3) business management programs for credit card processing. Business Loan Options - Commercial Mortgage Loan Programs Two of the most common commercial mortgage difficulties experienced by commercial borrowers can be avoided if they "Think Outside the Bank". The first business financing situation is the prevailing practice of traditional banks to avoid most special purpose properties (such as funeral homes and churches). Another commercial financing scenario is the common practice of commercial banks to include recall terms in their business loans. With such terms the bank can require repayment of the commercial mortgage under stated conditions. These undesirable business financing requirements can usually be eliminated by using a non-bank commercial lending option. Business Loan Options - Business Cash Advance Programs 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 successful business owners typically need more working capital than they can obtain from a bank, it is important for a business to "Think Outside the Bank" with non-traditional lenders to help with this working capital management function. Business Loan Options - Credit Card Processing Programs The selection of a credit card processing service can be critical in improving the cash flow of a business with significant credit card activity. Credit card processing providers can be combined with the credit card financing process mentioned earlier. In managing a merchant cash advance program, it is often possible to obtain a significant improvement in credit card processing activities. It is probable that a non-traditional lender will be the key source of effective help with credit card processing because traditional banks are usually not competitive in providing assistance with credit card financing. A closing business financing thought: I have written an earlier business loan article about commercial lenders to avoid. It should be noted that there are in fact both traditional and non-traditional (non-bank) lenders which should be avoided. Because of this, when commercial borrowers "Think Outside the Bank", they must be prepared to anticipate some ineffective non-traditional commercial lenders in their attempt to find better commercial financing involving credit card processing management, commercial mortgage loans and business cash advance programs. Copyright 2005-2007 AEX Commercial Financing Group, LLC. All Rights Reserved.
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About Stephen Bush: Steve provides candid business loan and church loan advice. Free Working Capital - Commercial Loan reports from AEX Commercial Financing Visit our business loan article directory for a completely unique version of this article.
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