Recent Changes Impacting Commercial Financing
There have been significant changes which will impact new business financing, commercial construction financing and refinancing of commercial loans. Several of these changes are highlighted below. However, there are important details not included below due to space limitations. Please contact Stephen Bush (AEX's Chief Executive Officer) for additional clarification.
Changes in Number of Active Commercial Lenders
There has been a sharp reduction in the number of business lenders actively making commercial loans and commercial mortgages. In some cases, lenders have totally gone out of business (bankruptcy or insolvency). In other situations, banks have stopped commercial lending while continuing retail banking activities for individuals.
What can business owners do about this? One effective approach that commercial borrowers should explore involves looking beyond their region for help with commercial real estate loans and other commercial financing. To accomplish this most efficiently, a business financing expert operating throughout the United States (such as AEX) should be helpful.
What can business owners do about this? One effective approach that commercial borrowers should explore involves looking beyond their region for help with commercial real estate loans and other commercial financing. To accomplish this most efficiently, a business financing expert operating throughout the United States (such as AEX) should be helpful.
Changes for Stated Income Commercial Loans
First, one commercial financing program where we have NOT seen changes in stated income financing: business cash advances using credit card processing. For this important working capital financing program, income documentation continues to be necessary only for larger business cash advances (financial statements and tax returns have always been a normal funding requirement for larger merchant cash advances).
Second, a stated income approach (no income verification and no tax returns) for commercial mortgages has been effectively eliminated by most commercial lenders and some stated income business lenders have gone out of business altogether.
Commercial Construction Financing Changes
Recent uncertainties in financial markets have resulted in an apparent shortage of commercial construction funding. The shrinkage of capital for
both commercial real estate loans and commercial construction
financing means that in many cases commercial borrowers will need to look beyond
their local area for effective commercial finance help by consulting with a national business financing expert such as AEX Commercial Financing Group. AEX continues to be successful in arranging
commercial construction loans throughout the United States.
UPDATE: With very few exceptions, we are finding that financing for commercial construction projects is not readily available. Please contact us for more details.
Commercial Borrowers Are Hearing Their Bank Say "NO" Much More Often
It has always been awkward and confusing for a small business owner to hear their banker reject a vital commercial financing request. The confusion often results from not having a firm idea of what to do next, and due to the current chaos in financial and credit markets, such rejections are being heard much more frequently.
This does mean that many commercial borrowers are increasingly finding that their customary commercial finance funding sources might not be reliable anymore. Astute business owners will discover that there are viable alternatives and effective business finance funding solutions. Starting several years ago, AEX Commercial Financing Group created a number of practical strategies for overcoming situations in which banks often say no regarding commercial mortgages and commercial loans. As you might imagine, these strategies have become even more relevant and useful for business borrowers in today's extreme commercial funding environment.
Changes in How Business Cash Advances Are Being Used
For most small business owners, the chaotic funding conditions which have impacted almost all commercial financing programs have changed how business cash advances are being used. The practical reality for most businesses is that effective options to get working capital quickly have been reduced.
Here are three of the key change factors behind the current funding environment for businesses:
(1) Most lenders have eliminated or are about to cancel unsecured lines of credit for small businesses.
(2) Many local and regional banks are reducing all or most of their commercial lending activities.
(3) Banks are demanding more collateral for almost all business finance activities.
On balance, the three changes noted above have significantly INCREASED the use of the AEX Business Cash Advance Program throughout the U.S. because this working capital funding program effectively deals with all three of the key changes impacting most business lending.