Business Loan and Commercial Mortgage Loan Alternate Strategies

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.

Here are two brief examples about how a commercial borrower is likely to benefit by "Thinking Outside the Bank". In many situations a traditional bank will provide a commercial mortgage but will include non-competitive covenants and terms. In other cases a traditional bank will decline the business loan because they do not provide commercial financing to the commercial borrower's particular type of business.

Some commercial mortgage borrowers will probably feel that a bank is their only source for a business loan. However, since banks traditionally focus on a few established industries, non-bank commercial lenders should be reviewed for most commercial loan scenarios. Therefore the recommended business financing strategy described in this article is to "Think Outside the Bank".

As I reported in a previous business loan discussion, in many commercial mortgage situations it is common for a local bank to assess stricter commercial loan conditions than would typically be seen in a competitive business financing scenario. Such banks can often take advantage if there are few business lenders in their market.

A prudent response by business borrowers is to consider non-traditional commercial mortgage options. It is not necessary for borrowers to depend upon traditional banks for business loan strategies. For typical commercial loan scenarios, a non-bank lender can often provide better business financing terms because of the competitive market situation.

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 common commercial mortgage 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 mortgage loans (which means that the bank can require early repayment of the commercial loan under various conditions). Both of these undesirable business loan situations can usually and easily be avoided by considering a non-traditional and non-bank lender.

Commercial Loan Choices - Merchant Cash Advance and Working Capital Loan Programs

Most businesses that accept credit cards 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 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.

Credit Card Processing Programs - Working Capital Management Choices

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 managing a merchant cash advance program, it is often possible to obtain a significant improvement in credit card processing activities. It is probable that a non-traditional lender will be the key source of effective help with credit card processing because traditional banks are usually not competitive in providing assistance with credit card financing.

A closing business financing thought: I have written an earlier business loan 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.

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.

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Stephen A. Bush and AEX Commercial Financing Group, LLC will provide candid commercial real estate loan advice. Sign up for free Commercial Financing reports
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