Article DetailsUnexpected Changes for Small Business Financing |
| Date Added: February 28, 2010 05:00:00 PM |
| Author: Stephen Bush |
| Category: Business: Banking |
| The change management strategies described below should be helpful for most typical situations involving small business loans and working capital financing. 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.
There have recently been a number of small business loan changes for commercial borrowers to cope with, and the situation does not seem to be improving. 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). For most business owners, the importance of a sound change management approach for dealing with working capital financing and small business loan changes is likely to increase over time. 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. In many cases, both individual consumers and small businesses have assumed more debt than truly necessary because banks made it excessively easy to do so. Now that most banks have effectively made it very difficult to obtain commercial loans, it is both logical and prudent for small business owners to seriously analyze whether it is viable to reduce their dependence on bank financing. 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 recommended that the small business finance expert chosen be totally unaffiliated with any current commercial banking 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. A variation of contingency planning for their commercial finance needs is a strategy which might prove to be the most helpful for small business owners. In its simplest form, this involves formulating a detailed plan for what action to take when specified events occur. 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 banks are not currently refinancing commercial mortgage loans under the same terms that they have previously. The possibility that their bank will not refinance existing business debt would be considered by contingency planning which evaluates alternative new commercial lending programs and sources to consider if that were to happen. |
|
|
