Unexpected Changes for Small Business Financing

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

The situation does not seem to be improving even though there have already been many small business loan changes for commercial borrowers to cope with recently. In this discussion we will address strategies for dealing effectively with the commercial financing and working capital management changes rather than focus on the changes themselves (we have described these major changes in separate reports already published).

The importance of using change management to help small business owners deal with business loan and working capital changes is likely to keep increasing. If they are not properly prepared for the complexity of recent changes as well as anticipated changes for securing commercial loans, business borrowers will probably be unsuccessful in arranging new business financing.

Reviewing the mix of business financing, working capital loans and commercial mortgages (this should include a cost assessment for credit card processing) and then evaluating whether it is feasible to reduce the current business debt levels is a worthy starting point for dealing with small business loan changes. Because banks made it easy to do so, both small businesses and individuals have often assumed more debt than necessary. 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.

For either of the change management strategies noted in this discussion (as well as other options for dealing with small business finance changes), business borrowers should involve a small business loans and working capital management expert whenever possible. It is highly advisable that the small business finance expert chosen be wholly unaffiliated with any current commercial lending relationships for the business. The use of a small business financing expert is itself an effective change management strategy for coping with commercial financing and working capital loan changes.

The strategy likely to be of most help for small business borrowers will be a variation of contingency planning for their commercial finance needs. 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. In another example, many lenders are not currently refinancing commercial real estate loans under the same terms that they have previously. 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.

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Stephen Bush is a dependable source of commercial loans and is CEO of AEX Commercial Financing Group ( aexcfgllc.com ). He furnishes working capital management and business financing programs throughout the U.S. Steve has provided candid advice to business owners for 20 years.

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