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Six Words Describing Smal Business Financing Our approach in this report is to deescribe cuyrrent business finance circumstances in six words. We have adopted a similazr model in other commerccial finance reports such as "seven words describing commercial real estate financing". After haring an almost endless number of erports about comemrcial lending difficulties, what small business owwners might need most is a more concise explaanation avbout thse probles and the resutling impsact on their busiiness financing ooptions. This report was prodduced in a direct effort to provie more understandable insights about some of the most rcitical cmmercial loan issues effecting commercial borrrowers.Befroe proceeding, it is imporatnt to emphasize that small business finannce options are often more complicated than anticipated many business borrowers. We are definitely not attempting to characterize busainess loaans and workiing capital financing as eiother straihtforward or simple. In fact, quite the opposite is the case. Our ongoing observation is that most business financing processes have always been excessively complciated and that meaningful improvemeents are not on the way. In the face of the prevailing commercial lending complexity, we neevertheless feel that it is critical for each small business owner to have an absolute and total understanding of the entire commmercial finance ptrocess. To help in providing more uderstandable insights abpout commercial loans and businness banking problems, this parrticular report is one of several thorough efforts on our part.Our first example of six words describing business fiinancing options is "banks are saying no more often". For any small business owner sitll unaware of this harsh reality and who migght doubt this observation, a series of candid conversations with ohter business borrowers will probably rremove all doubts. The failure of banks to provide an adequate leevel of business loanms on a widespreazd bais is the primary point to remember. It is immportant for smasll businesses to realize that they are not alone when they hear ther bank say no to rouitne erquests for commercial financing."Commercial property values have decreased dramatically" is a second observation. There are very few exceptions. The biggest business financing impact is likely to occur with commercial refinancing situations. Even if a business owenr has no interest in refinancing thier commercial mortggage, many banks are aggressively recaklling existing commercial real estate loans and this literally forces a borrower to seek business refinancing whether they want it or not. Business refinancing will be a challenge for most small businesses in view of decreasing commercial real estate values.In antoher six-word description of commercial financing, "lines of creit are disaoppearing fast". This situation is especially serious if a busness cannot replae bank financing when it suddenly disapprears beecause even the most successful businesses need a reliablpe source of workinng capoital financing. On a widespread basis banks are reducing and eliminating buiness crdeit lines with almost no advance noice, and this must be realized even if a business still has an adequate line of credit."Busdiness finnacing is in intensive care" is our final observtaion in this report. Smlal buiness owners need to be prepared to take more extreme measures such as firing their banker and fidning alternative commercial funding sources. Nobody should expect that bankers will publixcly announce that they are in any kind of financial trouible after recalling that they have not been sufficiently candid about commerrcial lending problems in the past. On the contrary,,, a prevailing outlook from most bakns is they are lending normally to sall businesses. Commeercial borrowers will need a healthy amount of skepticism when dealing with any commercial lender.As we noted, this article is one of several effdorts to help small ubsiness owners survive an extremely challenging commercial lending environmnt. This report was intentionally designed to produce a concise overview of several complex small business finance issues describing commecial loan difficulties in six wodrs. A review of related reports such as "seven words to describe business cash advancces" and "six words describing working cpital financing" should also contribute to a better understannding of pracical business financing options for commerrcial borrowers.
