CommercialFinancingSolutions-ThinkOutsideTheBankJuly,2007byStephenBushCommercialfinancingborrowersarelikelytofeelthatatraditionalbankistheirbestsourceforbusinessfinancing.However,becausemosttraditionalbanksfocusonasmallnumberofestablishedindustries,non-traditional(non-bank)andnon-localcommerciallendersshouldbeconsideredformostcommercialfinancingsituations.Thereforetherecommendedcommercialfinancingstrategy(asdiscussedinthisarticle)istoThinkOutsidetheBank”.Thereareseveralcommercialfinancingsituationsinwhichcommercialborrowerswillfrequentlyfindthatnon-traditionalcommerciallendersarebetterpositionedtoprovidetermsthataremoreadvantageoustothecommercialborrower:(1)Businesscashadvanceandcreditcardfactoringprograms;(2)commercialmortgageloans;and(3)creditcardprocessingprograms.Insomecasesatraditionalbankwilloffertoprovidecommercialfinancingbutwillattachexcessivelystringenttermsandcovenants.Inothercasesatraditionalbankwilldeclinethecommercialfinancingoutright,perhapsbecausetheydonotevenprovidebusinessfinancingtothecommercialborrower’sparticularindustry.Ineithercase,thecommercialborrowerislikelytobenefitbyThinkingOutsidetheBank”.AsInotedinanearliercommercialfinancingarticle,inmanynon-competitivebusinessfinancingsituationsitisnotunusualforalocaltraditionalbanktoimposeharshercommercialfinancingtermsthanwouldtypicallybeseeninamorecompetitivebusinessfinancingmarket.Suchtraditionalbanksroutinelytakeadvantageofarelativelackofothercommerciallendersintheirlocalmarket.Anappropriateresponsebycommercialborrowersistoseekoutnon-bankcommercialfinancingoptions.Itisneithernecessarynorwiseforcommercialborrowerstodependonlyuponlocaltraditionalbanksforcommercialfinancingsolutions.Formostcommercialfinancingsituations,anon-localandnon-bankcommerciallenderislikelytoprovideimprovedbusinessfinancingtermsbecausetheyareaccustomedtocompetingaggressivelywithothercommerciallenders.COMMERCIALFINANCINGEXAMPLEONE-THINKOUTSIDETHEBANKBusinessCashAdvanceandCreditCardReceivablesProgramsMostbusinessesthatacceptcreditcardsintheirbusinesswillqualifyforabusinesscashadvancewiththeircreditcardreceivables.Traditionalbankswilltypicallybeverypoorcandidatestoconsiderifabusinessneedsassistancewithcreditcardfactoringandbusinesscashadvances.Becauseeventhrivingbusinessesfrequentlyneedmorecashthantheycanborrowfromabank,itcanbeofcriticalimportanceforabusinesstoThinkOutsidetheBank”andlocatenon-traditionallenderstoassistwiththiscommercialfinancingneed.COMMERCIALFINANCINGEXAMPLETWO-THINKOUTSIDETHEBANKCommercialMortgageLoansTwoofthemostcommoncommercialfinancingdifficultiesexperiencedbycommercialborrowerscanbeavoidediftheyThinkOutsidetheBank”.Thefirstcommercialfinancingsituationistheprevailingpracticeoftraditionalbankstoavoidmostspecialpurposeproperties(suchasfuneralhomesandchurches).Thesecondcommercialfinancingsituationisthetypicalpracticeofmostcommercialbankstoattachballoonand/orrecallprovisionstotheircommercialloans(whichmeansthatthebankcanrequireearlyrepaymentofthecommercialloanundervariousconditions).Bothoftheseundesirablecommercialfinancingsituationscanusuallyandeasilybeavoidedbyconsideringanon-traditionalandnon-banklender.COMMERCIALFINANCINGEXAMPLETHREE-THINKOUTSIDETHEBANKCreditCardProcessingProgramsThechoiceofanappropriatecreditcardprocessingservicecanbeinstrumentalinimprovingtheprofitabilityofbusinesseswithahighvolumeofcred...
