Unexpected Working Capital Financing Changes

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

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. Rather than focus on the changes themselves in this article (we have published separate reports describing the five major changes that have occurred so far), in this discussion we will address strategies for dealing effectively with the working capital management and commercial financing changes.

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. The complexity of recent changes as well as anticipated changes for securing commercial loans means that commercial ...
... borrowers will probably be unsuccessful in arranging new business financing if they are not properly prepared.

An effective and practical starting point for dealing with changes involving small business loans is to review the existing mix of working capital loans, commercial mortgages and all other forms of business financing (including credit card processing arrangements) to determine the feasibility of reducing the current level of commercial debt for a business. 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.

Business borrowers should involve a small business loans and working capital management expert whenever possible for either of the change management strategies described in this discussion as well as other approaches for dealing with small business finance changes. It is highly preferable that the small business finance expert selected be completely unaffiliated with any current commercial banking relationships for the business. For properly coping with working capital loan and commercial financing changes, using a small business financing expert is itself an effective change management strategy.

The strategy likely to be of most help for small business borrowers will be a variation of contingency planning for their commercial finance needs. In its simplest form, this involves formulating a detailed plan for what action to take when specified events occur. As one example, because many lenders are already eliminating or reducing existing unsecured lines of credit, it would only be prudent for commercial borrowers to anticipate that their current business lender might do the same and to plan in advance what to do if that does happen. In another example, many lenders are not currently refinancing commercial mortgages 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.
About Author:
Steve Bush is a consistent source of commercial loans and is CEO of AEX Commercial Financing Group ( http://aexcfg.com ). He furnishes working capital management and business financing options throughout the U.S. Stephen has provided practical advice to business borrowers for 20 years.