Business Financing Survives Despite Mixed Lending Signals

For small business financing, "mixed signals" has fortunately not been a regular description that applies to working capital and business loans. The use of "mixed signals" is much more common in describing the world of politics. The usual political example of "mixed signals" is typically depicted by conflicting statements made in different speeches. As banking corporations become more intertwined with the world of politics, it should probably come as no surprise that "mixed signals" as a description is now as relevant to the financial world as it is to the political world.

The use of "mixed signals" as a descriptive phrase usually reflects an element of variation, confusion and often deception. Particularly in a competitive business world where the mere appearance of confusion or deception can be devastating, this phrase is routinely intended to be critical and negative. With this viewpoint, it is striking to see how often "mixed signals" or similar words have been used to describe current banking activities (based on a recent online search). Because the actions and words of many banks are currently at odds with each other, the use of "mixed signals" seems to be appropriate and accurate, especially when viewed through the lens of commercial borrowers and business owners.

Commercial credit lines have been increasingly reduced or revoked entirely and fewer commercial mortgages are being completed in most locations even though lenders have indicated that business lending is proceeding at a normal pace. A direct result of this is confusion among business owners about the true availability of business financing and commercial real estate financing. Due to mixed signals as well as other factors, many commercial borrowers are now reluctantly admitting that banks are just not what they used to be. It seems like almost overnight most banks have lost the confidence of the public in a way similar to many automobile manufacturers that are now a tarnished and shriveled version of what they once were. With such changes, small business owners are facing a new commercial loan environment and must adapt quickly. Because their business banker is not as likely to be up to the task anymore, small business owners should not hesitate to admit that they must look out for their own best interests.

The analysis here is intended to be a candid and practical evaluation of a situation currently faced by many small business owners. When unwinding a long-term relationship with a bank or banker, some of the same trauma that occurs when any positive relationship suddenly goes sour is likely to be present. After doing the best that they can, all parties are then likely to move forward. When making decisions involving potential changes, a small business owner considering whether to fire their banker should analyze the likely consequences if no changes are made. If keeping the old bank is holding their business back, either by bad advice or inadequate business financing, most business owners will conclude that they should seek a new bank.

Despite the complicated and confusing lending climate for small businesses, there appears to be an adequate supply of new small business finance sources to fill the void left by the exit of many banks and other lenders from commercial lending. Having a reliable and effective business loan provider to consistently support the operational requirements of their business is what matters to most business owners after all is said and done. In the end, confusion regarding small business loans can produce several outcomes. The final decision for a commercial borrower impacted by the mixed signals will of course vary based on individual circumstances. The feasibility of finding a new working capital financing or business financing source is one of the most difficult issues to be considered in the process of small business finance decision-making.

Business borrowers should be prepared to take a more personal and active role in the commercial finance needs of their business in order to increase the chances of their business surviving despite mixed signals from commercial lenders. For small business owners seeking to learn more about any mixed signals they are experiencing with business loans, there are a number of business financing resources which will describe specific commercial finance issues in more detail.