Business Financing Solutions - Thinking Outside the Bank

Business financing borrowers are likely to feel that a traditional bank is their best source for commercial financing. 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 business financing strategy (as discussed in this article) is to "Think Outside the Bank".

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) Merchant cash advance and credit card factoring programs; (2) commercial real estate loans; and (3) credit card processing programs. In some cases a traditional bank will offer to provide business financing but will attach excessively stringent terms and covenants. In other cases a traditional bank will decline the business financing outright, perhaps because they do not even provide commercial financing to the commercial borrower's particular industry. In either case, the commercial borrower is likely to benefit by "Thinking Outside the Bank".

As I noted in an earlier business financing article, in many non-competitive commercial financing situations it is not unusual for a local traditional bank to impose harsher business financing terms than would typically be seen in a more competitive commercial financing market. Such traditional banks routinely take advantage of a relative lack of other commercial lenders in their local market. An appropriate response by commercial borrowers is to seek out non-bank business financing options. It is neither necessary nor wise for commercial borrowers to depend only upon local traditional banks for business financing solutions. For most commercial financing situations, a non-local and non-bank commercial lender is likely to provide improved business financing terms because they are accustomed to competing aggressively with other commercial lenders.

BUSINESS FINANCING EXAMPLE ONE - THINK OUTSIDE THE BANK
Merchant Cash Advance and Credit Card Receivables Programs

Most businesses that accept credit cards in their business will qualify for a business cash advance with their credit card receivables. Traditional banks will typically be very poor candidates to consider if a business needs assistance with credit card factoring and business cash advances. Because even thriving businesses frequently need more cash than they can borrow from a bank, it can be of critical importance for a business to "Think Outside the Bank" and locate non-traditional lenders to assist with this business financing need.

BUSINESS FINANCING EXAMPLE TWO - THINK OUTSIDE THE BANK
Commercial Mortgage Loans

Two of the most common business financing difficulties experienced by commercial borrowers can be avoided if they "Think Outside the Bank". The first business financing situation is the prevailing practice of traditional banks to avoid most special purpose properties (such as funeral homes and churches). The second business financing situation is the typical practice of most commercial banks to attach balloon and/or recall provisions to their commercial loans (which means that the bank can require early repayment of the commercial loan under various conditions). Both of these undesirable business financing situations can usually and easily be avoided by considering a non-traditional and non-bank lender.

BUSINESS FINANCING EXAMPLE THREE - THINK OUTSIDE THE BANK
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 assessing a business cash advance program, it is frequently possible to simultaneously arrange for a substantial improvement in the merchant's credit card processing program. Because traditional banks are usually not competitive in providing assistance with credit card factoring, it is equally likely that a non-traditional lender will be the primary source of effective and competitive help with credit card processing.

A closing business financing thought: I have written an earlier business financing article about commercial lenders to avoid. It should be noted that there are in fact both traditional and non-traditional (non-bank) lenders which should be avoided. So when commercial borrowers "Think Outside the Bank", it is still of critical importance that they are prepared to avoid a wide variety of problematic non-traditional commercial lenders in their search for viable business financing, especially when it involves business cash advance (credit card receivables and credit card factoring) programs, credit card processing services and commercial real estate financing.

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