Recent Special Commercial Finance Comments

AEX publishes commentaries about commercial finance funding strategies in a variety of formats. Some are issued as special reports or articles while others are announced via press releases. We often include these observations in The Working Capital Journal (which is updated regularly by AEX Commercial Financing Group). Excerpts from some of our recent business finance funding assessments are summarized below. Please do not hesitate to contact Stephen Bush (AEX's Chief Executive Officer) for more details or clarification of any comments.

The current chaos in commercial financing has changed how business cash advances are being used by most businesses. While there are still other working capital management choices which should be considered, the harsh reality for most business owners is that effective options to get operating cash quickly have changed.

On balance, the three changes noted below have significantly INCREASED the positive arguments in favor of the AEX Business Cash Advance Program.

(1) A growing number of banks (especially local and regional banks) have chosen to sit on the sidelines for a while with their business lending activities.

(2) Unsecured lines of credit seem to have vanished for most small businesses.

(3) Banks are demanding more collateral for business financing.

In the world of commercial financing for small business owners, these are certainly not the best of times for most businesses. However, it is precisely the less-than-ideal financial conditions that are likely to result in an attractive price when purchasing either a business opportunity or supplies. For those unfamiliar with “contrarian investing”, the best buying opportunities often occur during times dominated by excessive pessimism. This is due in large part to sellers feeling that times will get much worse before they get better, which results in a willingness to accept a lower selling price than they would otherwise. In these challenging times, AEX Commercial Financing Group has several working capital financing strategies to assist commercial borrowers obtain funding for circumstances such as the two following scenarios.

First, for inventory acquisition, many suppliers are offering unusual discounts when they are paid in cash. In most cases they are primarily influenced by (1) the possibility that they will not be paid in a timely manner and (2) their own cash shortfall for funding payroll and other basic expenses.

Second, poor business conditions have similarly produced some difficulty for business owners currently trying to sell their business. In most of these situations, the selling price has been reduced and/or the seller is willing to include financial help in the form of seller financing for a portion of the selling price.

In today’s challenging business borrowing climate, it is important for small business owners needing commercial construction loans to seek out a commercial finance expert who can discuss the feasibility of obtaining funding help. AEX Commercial Financing Group can arrange construction financing for financially-sound commercial projects in most areas of the country.

UPDATE — The timetable for construction funding has increased significantly, and many sources have stopped accepting new loans. Please contact us for updated guidelines.

Recent commercial loan uncertainties have resulted in an apparent shortage of business financing for construction of new commercial property. The current financial circumstances coupled with a shrinkage of capital for commercial real estate loans in general and commercial construction funding in particular mean that commercial borrowers should look beyond their local market area for commercial financing help.

AEX has prepared an executive summary about working capital advances (also referred to as business cash advances, credit card receivables financing and credit card factoring). Topics include (1) reasons for obtaining a working capital advance based upon credit card processing activity; (2) problems to avoid with a merchant cash advance; (3) criteria for credit card financing up to $300,000 and more in some cases; and (4) why AEX advises that commercial borrowers avoid the use of online business financing applications for all commercial financing.

Commercial real estate loans are likely to include a new set of problems to overcome for small business owners. One of the major new complications appears to be determining which commercial lenders are still capable of commercial financing of any kind. Once an effective business lending source is located, some potential obstacles to successful commercial mortgages remain unchanged. Business income continues to be a key component for assessing the financial health of a business and will ultimately have an inescapable impact on the appraisal of business value needed for commercial real estate financing. In the increasingly uncertain climate for all commercial loans, practical and straightforward advice from a commercial finance expert such as AEX Commercial Financing Group is likely to be a critical ingredient of an effective business financing process for commercial borrowers.

In making business financing decisions, it is becoming increasingly important for business owners to identify their most practical alternatives as quickly as possible. In today’s challenging financial climate this will not be an easy task, and there are harsh realities to be confronted by most businesses when candidly evaluating their realistic options for commercial funding. A key element in this process will be to locate a business finance expert (like AEX Commercial Financing Group and a few others) that can provide timely help and honest advice.

An important change issue for commercial finance funding: there are both real and apparent changes due to widespread inaccuracies about the availability of business finance funding. Another key change issue for commercial financing is the likelihood that more changes from commercial lenders will be forthcoming soon. Small business owners should adequately prepare for both current changes and future changes that might occur. A practical strategy for dealing with the changes involving increased collateral requirements, fewer lenders and reduced unsecured credit lines is the use of an effective business cash advance program.

Business Finance Funding Using Business Cash Advances

Business cash advance programs which provide cash based on projected future credit card processing are perhaps the most effective commercial funding strategy we have seen during the recent financial chaos. We have published a practical overview of this successful working capital financing approach — please refer to either the Executive Summary page on this website or Summary: Business Cash Advances in The Working Capital Journal. Key problems which should be avoided with credit card financing are highlighted in the summary. AEX Commercial Financing Group has eliminated all of these problems from their Merchant Cash Advance Program.

The rapidly-changing environment for business finance funding is likely to produce a series of new problems for business owners. To help address these evolving challenges, AEX Commercial Financing Group plans to play a prominent role in analyzing what is happening and what to do about it. There has already been an ample supply of disappointing responses by business lenders to recent economic circumstances — we encourage commercial borrowers to contact us to obtain more information and to describe their own problem-lender stories so that we can share their experiences with as broad an audience as possible.

Publicizing actions being taken by business lenders throughout the United States will contribute to at least two worthy goals: (1) To highlight controversial bank-lender practices with a view toward eliminating or reducing questionable lending tactics. (2) Help business owners prepare for commercial finance funding changes. We will periodically update a summary of our findings which can be viewed by clicking on the “Commercial Financing Help” link in the right-hand column of The Working Capital Journal.

Working capital financing is available from a rapidly-shrinking number of commercial banks, and most of these lenders are not among the small group of larger banks receiving bailout funds. This specialized business finance funding is primarily limited to businesses which are showing a net profit and are current in their loan payments. If these two conditions are met, AEX can usually arrange new commercial loans to refinance lines of credit and term loans which have been cancelled or recalled by many lenders. For businesses which would not qualify for business financing using these two standards, we have alternative funding options to consider such as business cash advance programs. Please contact AEX Commercial Financing Group for immediate help in identifying effective sources of commercial finance funding for both working capital and commercial real estate loans.