Commercial Finance Help

Plan B and Commercial Financing

2008-10-01T13:05:00.003-04:00

Having a "Plan B" can help small business owners avoid problems because it is increasingly "normal" for something to go wrong. In spite of the generally accepted wisdom of having a "Plan B", there is rarely enough attention paid to contingency planning for commercial loans.

Here is one especially relevant example which will help demonstrate the critical value of why commercial borrowers should "Always have a Plan B". A substantial number of banks have already failed or left the commercial real estate loan business with little (if any) advance notice. Very few business owners expected this to happen. For any business that relies on commercial funding, a "Plan B" should be formulated for the contingency that alternative financial arrangements could be needed in the near future.

Please contact AEX Commercial Financing Group for a candid discussion about how this or other financial changes could impact your business.

Fake Commercial Loan Articles

2008-09-15T15:07:00.002-04:00

In recent AEX Commercial Financing articles, we provided several practical strategies for avoiding the publishers of fictitious information concerning business financing. There are many unethical uses of internet content in which the website owner does not have permission to use the published information, and the growing presence of fake commercial loan articles should be a serious concern for commercial borrowers. At a minimum, a fake article about commercial finance topics such as business cash advances and commercial real estate loans is likely to result in confusion. In more extreme examples, incorrect working capital financing decisions might be based on inaccurate articles.

Stated Income Business Financing Update

2008-08-18T12:53:00.002-04:00

For commercial borrowers seeking stated income commercial loans, there have been dramatic changes during the past six months. One major lender which had been offering stated income business financing suddenly stopped making small business loans of all sizes and types. Another commercial lender has significantly reduced commercial real estate loan size and property types financed for their stated income commercial mortgage program. Whenever there are changes like these which appear to limit commercial funding options for business owners, it is especially important to discuss new working capital financing strategies with a commercial financing expert. We encourage commercial borrowers to contact us for a candid and personalized discussion.

Commercial Loans

2008-07-24T11:30:00.002-04:00

An understandable commercial loans question for business owners is "What should I do when my bank says no?". Perhaps you are simply worried that they might do so when you ask for working capital help.

The biggest reason that banks say no is because local and regional banks have decided to reduce their commercial financing activities. It is important to be prepared for this kind of rejection with commercial real estate loans and small business loans because it is a response that is being seen much more frequently.

I have published a pertinent article which addresses practical strategies for overcoming five common situations in which banks often say no regarding commercial mortgages. I have also written a business financing article entitled "Why Do Banks Say Yes When They Mean No?" which describes the frequent tendency of some banks to offer commercial loans with terms that they do not expect borrowers to accept. This is actually worse than the bank saying no because you will think that they said yes!

Working Capital Advances

2008-06-27T14:27:00.003-04:00

The use of credit card processing and credit card receivables factoring to obtain working capital advances has recently become a more viable business financing strategy. Although this approach for securing business cash advances has been available for a few years, many businesses used other financing sources to get needed working capital. The recent chaos in financial markets has changed how merchant cash advances should be evaluated. As always, various small business cash options should be considered, but the new reality is that the practical choices available have changed dramatically for most business owners.

Business Cash Advances Executive Summary

2008-06-09T09:29:00.000-04:00

A concise and practical business cash advances executive summary has been prepared by AEX Commercial Financing Group. Topics include five reasons for obtaining a business cash advance, ten problems to avoid with credit card factoring and credit card processing and 6 criteria for working capital advances up to $300,000 (and higher as appropriate). Also included is an explanation as to why AEX recommends that business owners avoid the use of online business finance applications.

Business Financing Malpractice Possibilities

2008-05-27T14:12:00.001-04:00

We recently published a business financing report which highlighted the special risk of malpractice. These serious problems for small business loans indicate a serious failure of professional duty, and we included three illustrations of common malpractice occurrences.

One of these examples: specialized SBA financing and commercial loans. Another situation leading to malpractice possibilities for small business funding: inexperienced business finance brokers. What borrowers need to know is that inexperience coupled with the complexity of business financing is likely to result in an unavoidable recipe for malpractice.

Commercial Loans and Small Business Financing Referral Fee Program

2008-05-12T10:21:00.001-04:00

AEX Commercial Financing Group works closely with many advisors and has developed a referral fee program for small business financing that will provide business advisors with new options for assisting their clients. With this program, AEX performs all of the necessary work, so it is not necessary for the referring advisor to have any knowledge of business loans and a license is not required to receive referral fees from AEX. The AEX Commercial Loans Business Advisor Referral Fee Program allows anyone to refer commercial finance opportunities and receive compensation upon completion of financing.

AEX is based in Ohio and provides help for specialized business financing and commercial real estate loans throughout the United States. According to Stephen Bush, Founder and Chief Executive Officer for AEX Commercial Financing Group, "AEX has developed a new Referral Fee program that will help business advisors perform at the highest possible level for their clients and also get fairly compensated for doing so with a reasonable amount of effort. A license is not necessary and referral agents can be friends, relatives, business colleagues or advisors."

Working Capital Loans - Inexperienced Commercial Lenders

2008-05-02T11:00:00.000-04:00

An inexperienced lender is one of the five key factors which will usually produce a worst case scenario for working capital loans and business cash advances. During the past year, there were many providers both entering and exiting the merchant cash advance business. While it is good news that some ineffective providers were forced to leave this specialized small business funding area, the bad news is that there are still many new and inexperienced companies attempting to operate in this complex field.

Small Business Loans - A Shrinking Role for Local/Regional Banks

2008-04-02T14:09:00.003-04:00

Local and regional banks are increasingly not capable or not interested in assisting with small business loans and working capital financing. If business owners are not paying attention to this emerging trend, they could be blind-sided when their bank suddenly refuses to renew commercial funding or cash management services.

The decreasing role of regional and local lenders in providing viable business financing will primarily impact commercial real estate loans, business cash advances, business opportunity financing, SBA loans and working capital loans. As disappointed as some business owners might be, this trend has many positive benefits.

The most practical benefit is that these lending institutions have never been the best source of commercial loans - they have simply been the most convenient and familiar source for small business funding.

High Pressure Phone Sales Tactics for Business Cash Advances

2008-02-01T09:15:00.000-05:00

Most business owners have probably noticed that they are receiving an increasing volume of unsolicited phone calls from agents representing business cash advance programs and commercial funding services. AEX Commercial Financing Group is aware of why this is happening and our suggested response to such commercial finance advisors is "just say no". In almost all cases, these agents are selling one and only one product (merchant cash advances using working capital factoring with credit card receivables) and have absolutely no idea how this cash management strategy will impact the overall financing capabilities for a business. Such "one note" sales tactics are rarely in the best interests of a business owner.

In dramatic contrast to the approach of these unsolicited calls, AEX Commercial Financing Group will contact business owners ONLY in response to a referral from their CPA/attorney/consultant or in direct response to a request from commercial borrowers to help them. Equally important, for many years AEX has operated an effective and successful business enterprise that provides all major forms of small business loans and is not restricted to business cash advances. However, we do have an advanced business cash advance capability, and we are totally dedicated to avoiding the ten major problems commonly seen with credit card factoring programs. In our experience the business cash advance companies most likely to have these critical problems are also the same companies most likely to make unsolicited phone calls to business owners about their services.

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Business Cash Advance Strategies - Learning from Working Capital Problems Seen in 2007

2008-01-11T09:09:00.001-05:00

An emerging working capital management trend seen during 2007 will have an increasing impact on business owners in 2008 and beyond. The shrinking availability of a traditional line of credit for most small and mid-size businesses means that it is more important than ever for a business to explore other financing options. The relative lack of unsecured lines of credit for an average business signals the growing value and importance for sound approaches to business cash advance strategies as well as refinancing short-term and long-term commercial debt. I have recently prepared the first of several reports which address the unusual mix of positive and negative business finance developments over the past 12-15 months.

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Credit Card Processing and Business Cash Advance Concerns

2007-12-27T13:35:00.000-05:00

As we all prepare to move forward into a new year, it is important to look backward and reflect on important business financing developments that occurred during 2007. Some of these involved commercial real estate loan and SBA loan issues and others were related to credit card processing and business cash advance services. We will be publishing several reports during the next few weeks to address these topics comprehensively. A common theme for one of the most significant negative trends we have observed is the expanding supply of residential loan officers and mortgage brokers now attempting to provide business loan services because the residential mortgage market has gone into a downward spiral.

AEX Commercial Financing Group is offering an advanced loan officer training program to assist prospective commercial loan brokers make this difficult transition. However, prospective commercial borrowers will be much better served by NOT dealing with inexperienced mortgage and business cash advance providers.

Business Finance and Working Capital Loan Choices

2007-11-30T15:21:00.000-05:00

Although long-term business loan options are frequently appropriate, there are several short-term working capital and commercial mortgage possibilities that will be much more effective for business owners in achieving successful commercial financing and credit card processing results. Short-term working capital business loan options are often overlooked because of an apparent preference for long-term business financing.

Short-Term Commercial Loan and Credit Card Processing Choices

The most critical short-term commercial financing techniques typically include short-term merchant cash advance and credit card processing programs and commercial real estate loan programs. Both working capital management approaches are frequently a source of confusion for business owners.

Short-Term Commercial Mortgage Business Loan Programs

A long-term business loan is appropriate for many businesses that own commercial property. Business properties should normally be financed with a combination of short-term and long-term funds. When a longer-term commercial mortgage is viable, it is preferable to secure long-term business financing, preferably for 30 years.

Nevertheless there will be business loan scenarios where long-term commercial real estate financing is not the best option. When this is the case, a business owner needs to realize that there are practical business financing choices.

When a Short-Term Commercial Property Loan is Appropriate

For business owners who expect to sell or refinance their commercial property within one to five years, it is especially advisable to explore short-term commercial mortgage loan programs. The most appropriate short-term working capital loan will have little or no prepayment penalties and "lockout" fees normally associated with longer-term commercial mortgage loans.

Even though we are not describing the details about commercial mortgage lockout fees and prepayment fees here, it is important to note that the absence of these costs in many short-term commercial loan programs is a favorable feature of shorter-term working capital business loan funding solutions. The avoidance of these potentially costly fees could result in a savings of as much as 25% or higher if a business owner sells their business during the time which would have included prepayment penalties in longer-term business financing.

What are the Tradeoffs in a Shorter-Term Commercial Mortgage?

Although prepayment and lockout fees will typically be avoided with a short-term commercial mortgage loan, there are some trade-offs to be made if a business owner selects a shorter-term working capital loan. When short-term commercial mortgage loans are available, the interest rate will frequently be in the range of 11% to 13%, the loan-to-value will typically be under 70% and such a working capital loan will not be readily available for special purpose commercial properties.

Best Possibilities for a Short-Term Commercial Mortgage

Warehouse, multi-family, office, mixed-use and retail business properties are the best possibilities for short-term business financing. Business owners should be comfortable with a time period of less than three years for a typical short-term business loan.

Limited Lenders to Implement Short-Term Business Financing

There will typically be a very small number of commercial lenders who are effective at implementing the short-term commercial mortgage loan strategy properly. There are also a number of problems to be avoided with short-term working capital management programs for a commercial mortgage loan, so choosing an appropriate provider is extremely important to any business owner considering a short-term commercial mortgage loan program.

Working Capital Management and Business Cash Advance Programs

For any business that accepts credit cards as a method of payment, a business cash advance is a critical working capital management tool that is often overlooked. Even thriving businesses frequently need more working capital than they can borrow. One of the least-known working capital management strategies for successful businesses is potentially the single best working capital loan strategy for obtaining needed cash for growing their business: the use of a merchant cash advance or business cash advance program.

The most likely candidates to benefit from this working capital loan strategy are retail stores, service businesses, restaurants and bars. This highly-effective working capital management strategy uses an under-utilized business asset (credit card receivables) to obtain business cash advances based upon a merchant's sales volume.

Credit Card Financing Based on Credit Card Processing Programs

This commercial financing approach is referred to as "credit card receivables financing". Some merchants have probably used a business financing approach known as "receivables financing" which generates cash for the business by selling their business receivables at a reduced price.

Very few retail and service businesses can properly document their accounts receivable to acquire business financing. Smaller service businesses and retail stores are not likely to have receivables for a business loan.

Businesses accepting credit cards have substantiated credit card sales volume. The documented sales volume becomes an asset to commercial financing for the business. A merchant cash advance up to $300,000 is available based on business sales volume.

The working capital loan time period covered by a business cash advance is typically 12 months or less. For businesses that desire to continue the merchant cash advance program beyond this period, it is usually an easy matter to get an additional working capital cash advance once the initial one has been completed.

Lender Problems and other Limitations with Credit Card Factoring

As with any successful working capital management strategy, there will typically be only a small number of commercial lenders who are effective at implementing the working capital loan strategy properly. There are also a number of problems to be avoided with business cash advance programs, so choosing the appropriate provider of this working capital management service is extremely important to any business owner considering a business cash advance program.

Advisory Report: Avoid Online Business Finance Applications

2007-11-26T14:09:00.000-05:00

AEX Commercial Financing Group has issued an advisory report outlining precautions to take with online business financing applications. This timely issue impacts commercial borrowers using business finance websites. The AEX Report is likely to be relevant for many business borrowers and should help business owners avoid commercial loan problems encountered when submitting an online request.

This particular AEX Special Report describes how and why to avoid the online business finance application trap. Commercial borrowers should not be surprised to discover that many lenders will provide an online business loan application. It is critical for business owners to understand why it is not in their best interest to use an online business financing application and how they should proceed in their search for an appropriate commercial loan.

As noted in the AEX Report, business owners should be especially alert for using an online application approach for business cash advance and credit card processing programs.

Avoiding Business Cash Advance Problems

2007-11-21T11:15:00.000-05:00

There are a number of critical problems that business owners should be aware of before a business cash advance is obtained. The most serious problems associated with credit card processing and business cash advances are listed below so that they can be easily avoided by businesses. Recommended and Preferred merchant cash advance and credit card processing requirements are shown after each potential credit card factoring problem.

(1) Closing costs charged. Suggested requirement: Closing costs not required.

(2) Initial up-front fees. Suggested requirement: Up-front fees not required.

(3) Collateral required. Suggested requirement: No collateral requirements.

(4) Financial statements required. Suggested requirement: No financial statements required except for larger business cash advances.

(5) Pay off the business cash advance with required fixed payments. Suggested requirement: No fixed payment requirement.

(6) Pay off the business cash advance over a fixed term. Suggested requirement: No fixed term for repayment required.

(7) Two years or more in business required to qualify. Suggested requirement: In business for one year.

(8) Credit scores of at least 680 required. Suggested requirement: Acceptable credit scores of 500 and higher.

(9) Business cash advance limited to $50,000. Suggested requirement: Maximum cash advance of $300,000.

(10) 12 to 24 months of credit card sales required. Suggested requirement: Most recent six months at $5,000 or more in sales.

Can the Ten Credit Card Factoring Obstacles Discussed Above Be Avoided in All Cases?

Absolutely. There are credit card financing programs which preclude all of the difficulties listed above. It is not prudent to accept any of these ten obstacles to receive a merchant cash advance based on credit card sales and credit card processing activity.

It would be a rare situation for all of these potential problems to be of primary importance to a business owner. Most commercial borrowers will encounter several of these problems if they are evaluating business cash advance programs that use credit card processing and credit card financing.

Credit Card Processing and Business Cash Advance Options

2007-11-20T13:14:00.000-05:00

Credit card financing improvements can provide dual working capital loan benefits by both eliminating credit card processing problems and providing improved cash flow by enhanced management of a business cash advance program and working capital financing strategies. The total cost benefits of combining a credit card processing program and credit card receivables financing can be impressive and valuable.

Credit card financing can be one of the most overlooked and problematic working capital business loan issues for a merchant. An effective credit card factoring program can lessen many credit card processing obstacles by implementing appropriate working capital management cost-reduction solutions.