Tuesday, April 8, 2014

What To Do About Business Financing When A Bank Says No

By: S.A. Bush

Banks are routinely saying “no” to small businesses which are both profitable and long-term customers. Because this has become such a widespread business banking problem, it is now common to hear phrases such as “thinking outside the bank” and “business loans without banks” when talking about alternatives small business owners might need to analyze.

It is rare for a small business to openly pursue the possibility of replacing their bank. Pursuing such a path when their bank says “no” to routine requests for business financing is realistically the primary option to be reviewed by any astute business owner. Improvements to the overall financial health of a business will be achieved in a pleasantly surprising number of cases even though this search for new business finance choices is undertaken under protest by most commercial borrowers. It might be appropriate to note that one or two banks operate in a near monopoly environment in a surprising number of communities and cities. When small business owners have literally been forced to find new business finance alternatives, they are often pleased to discover that they can not only replace existing bank financing satisfactorily but also improve their bottom line in the transition.

There are two financing situations that businesses should especially be prepared for banks saying “no”. One of these involves working capital (including business lines of credit) and the other commercial property financing. While a small number of banks are still proving to be reliable sources for some commercial financing options, recent nationwide business banking reports clearly show a drastic reduction in small business loans for commercial property loans and working capital.

As noted above, small business owners are increasingly hearing their bank say “no” to requests for needed business financing and working capital loans. Most commercial borrowers are unsure what to do next because this represents uncharted waters for them. As described in this article, while a bank saying “no” is not an outcome that any business owner would hope for, it can eventually lead to an overall improvement in commercial finance alternatives under many circumstances.

Source: Articledashboard.com

What To Do About Business Financing When A Bank Says No

No comments:

Post a Comment