Business Financing And Working Capital Changes

Change management to deal with working capital and business loan changes is likely to increase in importance for small business owners during the next year or two. Commercial borrowers will probably be unsuccessful in arranging new business financing if they are not properly prepared for the complexity of recent changes as well as anticipated changes for securing commercial loans.

There have recently been a number of small business loan changes for commercial borrowers to cope with, and the situation does not seem to be improving. Rather than focus on the changes themselves in this article (we have published separate reports describing the five major changes that have occurred so far), in this discussion we will address strategies for dealing effectively with the working capital management and commercial financing changes.

For most typical situations involving small business loans and working capital financing, the strategies described below should be helpful. Because even the most straightforward business finance circumstances can involve unexpected complications, it is essential for any small business owner to discuss their specific scenario with a business financing expert.

An effective and practical starting point for dealing with changes involving small business loans is to review the existing mix of working capital loans, commercial mortgages and all other forms of business financing (including credit card processing arrangements) to determine the feasibility of reducing the current level of commercial debt for a business. In many cases, both individual consumers and small businesses have assumed more debt than truly necessary because banks made it excessively easy to do so. It is both prudent and logical for small business owners to analyze whether it is viable to reduce their dependence on bank financing now that most banks have effectively made it very difficult to obtain commercial loans.

A variation of contingency planning for their commercial finance needs is a strategy which might prove to be the most helpful for small business owners. This primarily involves formulating a plan which identifies in advance which actions to take if anticipated events take place. For example, it will be prudent for commercial borrowers to anticipate that their current business lender might reduce or eliminate an existing unsecured line of credit (working capital financing not secured by commercial property) because this trend is in fact already gaining momentum with commercial banks in all regions. . Contingency planning for business financing would prepare a small business owner for the possibility that their bank will not refinance existing business debt by evaluating alternative new commercial lending programs and sources to consider if and when that happens.

Business borrowers should involve a small business loans and working capital management expert whenever possible for either of the change management strategies described above as well as other approaches for dealing with small business finance changes. It is highly advisable that the small business finance expert selected be completely unaffiliated with any current commercial lending relationships for the business. For properly coping with working capital loan and commercial financing changes, using a small business financing expert is itself an effective change management strategy.

By: S.A. Bush

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Steve Bush and AEX Commercial Financing Group are a dependable source of commercial loans. Stephen has provided candid advice to business owners for 30 years and furnishes working capital financing and business financing services