banks saying no

What If Your Bank Says No?

The commercial lending process has grown more challenging for small business owners, and business bank consulting might prove to be the most successful strategy for achieving commercial loan and working capital financing improvements. Selecting a business loan expert is easily the most important step in hiring a qualified commercial bank consultant. No matter how difficult it might seem, this task must be pursued until a business owner is satisfied.

Is your bank currently saying “Yes” to your funding requests? What if they say “No?” Here are three immediate tasks for small business owners interested in finding the “best” source of commercial financing:

  • Evaluate non-bank lending sources
  • Distinguish between good banks and bad banks
  • Fire and replace an ineffective bank

The Importance of Non-bank Financing

It is essential to include non-bank sources in the overall evaluation of practical commercial loan options, so the selected small business finance expert must not only be familiar with banks but also equally capable of evaluating sources of non-bank financing (a financial strategy sometimes referred to as “Business Loans without Banks”). The business bank consultant will need to have a working knowledge of what distinguishes bad banks from good banks as well as the ability to identify effective non-bank sources that can provide small business financing services that are increasingly unavailable even from the good banks.

It should be noted that while it is likely that the thorough review of alternative business financing strategies might not be as urgent if an existing commercial bank is performing as needed by a business, there are still compelling reasons to consider other options in the event that something unexpected happens. For example, if their bank is classified as a bad bank, realistically it will be necessary for a small business owner to entertain the idea of firing their banker either sooner or later.

banks saying no

Searching for the Good Banks: The Need for Commercial Lending Experts

If it becomes necessary to replace a bank, it should be realized in advance that based upon specialized small business finance criteria, only a few banks can pass the stringent tests to be viewed as a good bank. If a small business is currently using what is deemed to be a bad bank but still needs an ongoing banking relationship, a vital part of commercial bank consulting will be the identification of at least one good bank candidate. Even though many financial experts will debate whether there are any good banks left standing, the search for them must realistically continue.

With the ongoing debate as to whether banks are really eliminating or reducing their small business financing services, fortunately there is plenty of data available to objectively confirm the sharp downward trend in working capital loans and commercial mortgages made by banks in recent months and years. But even when faced with public reporting of their actual loan activity, it is almost a sure thing that banks referred to as bad banks will have a conflicting view of the results. It does not help the position taken by banks (statements that they are lending at a normal level to small businesses) when commercial borrowers recall that during recent banking chaos banks were not the most reliable sources of information even when testifying before Congress.

Disagreements About Bank Lending Activity to Small Businesses

With widespread public reports indicating that small business financing has fallen to the lowest levels in many years, banks are simultaneously boasting about the supposedly robust level of their business loan activity. In one possible explanation for the disparity, banks might be offsetting a clear decrease in small business lending with an increase of commercial loans to large corporations.

Before completing any new financial agreements, borrowers should benefit by calling upon the business bank consultant to help them make a final call or to serve as a commercial finance expert providing them with a candid second opinion. This report is strongly encouraging small business owners to take aggressive action when determining which commercial real estate financing and working capital loan options are realistic for their business circumstances. Glaring differences such as those discussed above seem to make a compelling case for efforts to improve small business financing with the strategic use of commercial bank consulting.

What do you plan to do if your bank says no?

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banking practices

Risky Banking Practices

banking practices
Many risky banking practices contributed to financial losses in the stock market before the beginning of the Great Depression. An important corrective measure was the Banking Act of 1933. This law was also known as the the Glass-Steagall Act.

Almost immediately after the Banking Act of 1933 was put into place, the financial firms began lobbying for “deregulation” of banks. Ultimately these institutions apparently decided that their cause for deregulation would be enhanced if other industries were deregulated first.

This approach gained full momentum under President Reagan. Even though banks were not yet deregulated, they began acting as if they were and the savings and loan crisis was just the first result. During the 1990s, Citicorp attempted a merger with Travelers Group that was ruled to be illegal because it combined banking, securities, and insurance activities in one company. This was a direct violation of the Glass-Steagall Act.

Instead of forcing these two companies to abandon their merger, Congress (with a lot of help from bank lobbyists) decided to abolish the Glass-Steagall Act and replaced it with the Gramm-Leach-Billey Act (also known as the Financial Services Modernization Act of 1999). Some observers refer to this date as the financial equivalent of “The Day the Music Died” in the Don McLean classic (American Pie). The rest is history. The first chapter in this new financial history book was the Enron scandal, the second chapter was subprime mortgages, the third chapter was the banking crisis of 2008, and the fourth chapter is a work in progress.

Bankers have been seeking less controls and regulations governing their financial activities since the beginning of banking time. After Thomas Jefferson served as President of the United States over 200 years ago, he spent a great deal of his time and energy trying to convince everyone that bank changes were needed. While there are different variations of this quote making the rounds because Jefferson repeated it often and said it a little differently each time, he said the following:

  • “Banking establishments are more dangerous than standing armies.”

Business Training Help

Cost Effective Business Training

Cost Effective Business Training

The need for small business training help often goes unanswered because of potential costs or a misunderstanding of the business training goals. Once this confusion is eliminated, business training help can contribute to increased effectiveness in eight key areas (including business communication). As for costs, one of the key goals to be addressed is cost-effectiveness. This particular training goal requires particular attention.

How Can Businesses Improve Public Relations With Their Bank?

Which Way to Better Public Relations With Your Banker?

Which Way to Better Public Relations With Your Banker?

The state of business communications between small businesses and their banking institutions is effectively on life support. This is clearly not a good condition to be in, and most small business owners would change this situation in a heartbeat if they could. One potential solution to this dilemma is for each small business owner to engage in a variation of a public relations campaign in an effort to improve business communications with their bankers and banks.

This will generally involve two activities that many companies are somewhat lacking in:

  • Business Writing
  • Business Negotiating

Even in situations where there are significant negotiating and writing skills present, the use of a business public relations expert should be evaluated. After all, this is an important part in maintaining or restoring the financial health of a company!

Replacing Business Financing from Banks

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Many of us have service agreements to repair and replace air conditioners, furnaces and cars if they are not working. What are small businesses supposed to do if their commercial financing from a bank no longer works?

There are some effective small business finance alternatives to commercial bank loans. While success will be different for each business, there are several business financing choices available to consider as effective replacements for working capital financing and commercial loans previously obtained from banks which are no longer providing business finance services to small businesses. Three of them are briefly described below.

Small business owners are likely to hear reports from multiple sources about the increasing difficulty in obtaining business loans from banks. As a result, a prudent alternative is for commercial borrowers to explore whether there are effective commercial finance options to replace bank financing.

One of the chief ongoing criticisms reported by many small business owners is the failure of most banks to satisfactorily meet their routine daily commercial loan needs. Even if there has been a long and prosperous working relationship with a bank, very few small businesses have the financial means to overlook the current business loan shortfall exhibited by most banks. One common (but incorrect) response is that nothing can be done to replace the traditional source of commercial financing although it does seem that the reality of less bank financing is acknowledged by many commercial borrowers. For most small businesses needing to explore immediate ways for replacing bank business loans, the three examples provided below are illustrations of practical small business finance strategies readily available to them.

  • Working capital loans
  • Accounts receivable financing
  • Credit card receivables factoring

Among the most useful options to replace business bank financing are working capital loans from non-bank sources that do not require commercial property or other assets as collateral. This kind of business financing might be needed to replace a line of credit which is being reduced or eliminated by a traditional bank. Perhaps a business borrower needs new business funding to buy supplies or inventory. A reliable source of working capital is a key ingredient for continued success for even the most successful business. Traditional banks might need to be replaced by more effective commercial lending sources because as noted both here and in media reports, banks are rarely doing an adequate job of filling this critical role.

Accounts receivable financing is another practical business finance choice to replace bank financing. To bridge a cash flow gap between sales and payment from customers, this form of receivables factoring can be helpful. While this is by no means a new form of business financing, the major use has typically been by large corporations. Commercial borrowers are rapidly learning to adopt this effective financial strategy due to banks exiting their previous active role of providing small business loans.

A commercial funding approach generally referred to as credit card receivables factoring or business cash advance will also be a useful alternative for businesses which regularly accept credit cards from their customers. By allocating a portion of future credit card processing toward repayment, it is a way for businesses to receive cash now and gradually repay the amount provided.

None of the working capital financing options just noted are totally free of potential complications or problems. At the same time, it should be noted that the sudden lack of reliable bank financing for small business owners is itself a major complication and problem requiring a timely solution. As with any business service, the advantages and disadvantages need to be thoroughly reviewed before finalizing any new arrangement for business financing.

Business Finance Communications Career Training

New career choices are probably being reviewed (or at least considered) by thousands of individuals who possibly thought “never again” because they were in a “secure” job. Unfortunately the old definition of job security is now melting before our eyes, so prudent career alternatives should realistically be considered by almost everyone. The career opportunities for small business finance communications consulting are worthy of further evaluation. The AEX Business Finance Consultant Training Program would be an excellent starting point.

Small Business Finance Consulting Careers

Business Financing Problems and Risks

Business financing is increasingly impacted by a series of problems and risks. In some cases these are the same old problems, but the most difficult obstacles are due to changing factors that are preventing most small business loans by banks. These small business financing risks and problems will not disappear due to a more prosperous economy as some observers have suggested. There will need to be fundamental legal and structural changes to the banking system to restore bank participation (in making commercial loans to small businesses) to a healthy level. In the meantime small business owners should be prepared to find new business financing sources and alternatively to reduce commercial debt.