Commercial Mortgage and Working Capital Business Loan Choices

By: Stephen A. Bush

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. Non-traditional business lenders are commonly considered to have the competitive edge for a variety of business financing situations.

In some cases a traditional bank will offer to provide a business loan but will attach excessively stringent terms and covenants. In other cases a traditional bank will decline the commercial mortgage outright, perhaps because they do not even provide business financing to the commercial borrower's particular industry. In either case, the commercial borrower is likely to benefit by "Thinking Outside the Bank".

Some business loan borrowers are likely to feel that a traditional bank is their best source for a commercial mortgage. However, because most traditional banks focus on a small number of established industries, non-traditional (non-bank) and non-local commercial lenders should be considered for most business financing situations. Therefore the recommended commercial loan strategy (as discussed in this article) is to "Think Outside the Bank".

As I reported in a previous business loan discussion, in many commercial mortgage situations it is common for a local bank to assess stricter commercial loan conditions than would typically be seen in a competitive business financing scenario. Such banks can often take advantage if there are few business lenders in their market.

A prudent response by business borrowers is to consider non-traditional commercial mortgage options. It is not necessary for borrowers to depend upon traditional banks for business loan strategies. For typical commercial loan scenarios, a non-bank lender can often provide better business financing terms because of the competitive market situation.

There are several business financing situations in which commercial borrowers will frequently find that non-traditional commercial lenders are better positioned to provide terms that are more advantageous to the commercial borrower: (1) commercial real estate loan programs; (2) business cash advance and credit card financing programs; and (3) credit card processing programs.

Commercial Loan Programs - Commercial Mortgage Business Loan Choices

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.

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.

Working Capital Business Loan and Business Cash Advance Programs - Business Financing Alternatives

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 choice of an appropriate credit card processing service can be instrumental in improving the profitability of businesses with a high volume of credit card activity. The analysis of credit card processing providers can be effectively combined with the credit card factoring and credit card receivables process described above.

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 competitive help with credit card processing improvements.

A closing commercial financing comment: I have published a previous commercial loan report about business lenders to avoid. I want to emphasize that there are traditional and non-bank lenders which should be circumvented.

When business owners are "Thinking Outside the Bank", they should be ready to avoid troublesome non-traditional business lenders in their quest for worthy working capital management dealing with commercial real estate loans, credit card financing and credit card processing.

Copyright 2005-2007 AEX Commercial Financing Group, LLC. All Rights Reserved.

Article Source: Loan Info Center

Stephen Bush provides candid advice for commercial financing and commercial real estate financing situations
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