Business borrowers have more commercial mortgage loan alternatives than they realize. I refer to these business loan alternatives as ""Thinking Outside the Bank"" because a typical commercial borrower probably believes that a bank is the best source for a commercial mortgage loan. Non-traditional business lenders are usually viewed as having the competitive edge for many common business loan scenarios.
In some cases a traditional bank will offer to provide a business loan but will attach excessively stringent terms and covenants. In other cases a traditional bank will decline the commercial mortgage outright, perhaps because they do not even provide business financing to the commercial borrower's particular industry. In either case, the commercial borrower is likely to benefit by ""Thinking Outside the Bank"".
Some business loan borrowers are likely to feel that a traditional bank is their best source for a commercial mortgage. 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 commercial loan strategy (as discussed in this article) is to ""Think Outside the Bank"".
As I noted in an earlier commercial mortgage article, in many non-competitive business loan situations it is not unusual for a local traditional bank to impose harsher business financing terms than would commonly be seen in a more competitive commercial loan market. Such traditional banks routinely take advantage of a relative lack of other commercial lenders in their local market.
An effective response by borrowers is to emphasize business financing options other than the traditional ones. It is not wise for business borrowers to depend only upon local banks for commercial loan possibilities. For common commercial financing circumstances, a non-local business lender can frequently provide the best business loan terms because of competition with other business lenders.
There are three business loan scenarios in which borrowers will commonly discover that non-traditional lenders will offer terms that are better for the business owner: (1) commercial real estate financing programs; (2) working capital business loan programs; and (3) business management programs for credit card processing.
Commercial Loan Programs - Commercial Mortgage Business Loan Choices
Two of the most prevalent commercial real estate loan obstacles can be precluded with a ""Think Outside the Bank"" mentality by businesses. The first commercial mortgage obstacle is the common practice of most banks to decline business financing for special purpose commercial properties such as churches and golf courses.
A second business loan possibility is the frequent practice of many commercial banks to add recall and balloon conditions to their commercial loans. The bank can then require early payoff of the commercial real estate loan under stipulated conditions. Both commercial financing situations can easily be prevented by a non-traditional lending source.
Working Capital Business Loan and Business Cash Advance Programs - Business Financing Alternatives
Many merchants that accept credit cards in their business will qualify for a merchant cash advance with credit card factoring. A traditional bank will usually be a poor source of help if a business needs to use credit card financing.
Because successful business owners typically need more working capital than they can obtain from a bank, it is important for a business to ""Think Outside the Bank"" with non-traditional lenders to help with this working capital management function.
Commercial Loan Alternatives - Programs for Credit Card Processing Management
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 coordinating a business cash advance and working capital business loan program, it is usually possible to achieve improvements in the business owner's credit card processing services. Traditional banks are usually not competitive in providing assistance with a business cash advance using credit card receivables. So it is likely that a non-traditional lender will be the major source of competitive help with credit card processing improvements.
A closing commercial financing comment: I have published a previous commercial loan report about business lenders to avoid. I want to emphasize that there are traditional and non-bank lenders which should be circumvented.
When business owners are ""Thinking Outside the Bank"", they should be ready to avoid troublesome non-traditional business lenders in their quest for worthy working capital management dealing with commercial real estate loans, credit card financing and credit card processing.
Copyright 2005-2007 AEX Commercial Financing Group, LLC. All Rights Reserved.
About the author: Steve Bush provides candid church financing and business loan advice. Sign up for a free series of AEX Credit Card Processing - Commercial Loan reportsFeel free to grab a unique version of this article from the business loan Articles Submissions Service
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