Solutions For The Working Capital Loans Puzzle

The practical rationale for using a puzzle analogy in this article is to help describe an otherwise complex working capital and commercial financing situation in a more understandable way. The current commercial loan stakes for commercial borrowers could not be higher because their business survival might be hanging in the balance, and the comparison of small business financing to a puzzle is not meant to diminish the critical importance of success by business owners when they encounter difficulties with commercial lenders.

In using a puzzle comparison, this analogy provides an opportunity to evaluate the commercial loans puzzle (a challenging commercial lending climate) as something that tests the ingenuity of small businesses to solve. An increasing number of commercial borrowers are comparing what they are finding to a puzzle with pieces scattered everywhere when reviewing the current small business finance environment. A reasonable reflection of the underlying problems that cannot be ignored by a prudent business borrower is provided by the ongoing descriptions of commercial financing in terms of solving a puzzle. The growing confusion represented in small business owner interactions with their current bank concerning available business financing options is no doubt also reflected by such an analogy.

For some commercial borrowers, recent experiences with their business banker probably resemble a confusing small business finance puzzle in which the level of difficulty keeps changing. Banks have recently been taking over two months for a working capital financing process that should realistically be completed in under one month, and even when taking this excessive period of time it has become a common experience for many banks to fail in providing the expected business capital without providing any warning that funding has been delayed or disapproved. Suggestions that commercial lenders have misrepresented what is required to finalize commercial loans are emerging in too many reports for borrowers to ignore.

For a number of years most business financing has been more complicated than borrowers realize. Primarily because the eventual results have changed so drastically, recent events have made these complexities more obvious. It is situations like those noted above that cause business borrowers to feel like some of the required puzzle pieces have been removed from the board. Because fewer banks are now providing small business financing, that is in effect exactly what has happened. A business owner is indeed likely to feel as if the commercial finance puzzle pieces have disappeared when this happens with the bank that a business has previously relied upon for their small business finance needs.

By continuing the puzzle analogy, there are two practical options for commercial borrowers to analyze and consider. First, business owners should assess the potential for reducing their commercial debt requirements, an approach which can lead to a small business finance puzzle which will involve "fewer pieces" if executed successfully. Second, small businesses should attempt to find the "missing pieces" in the form of alternative commercial lending sources. Both of these as well as any other realistic commercial loan choices should be thoroughly reviewed with the help of an experienced expert because of anticipated business financing complexities.