Being realistic when seeking new working capital financing and commercial loans should be a key goal for all commercial borrowers. Business owners should be prepared to encounter stark changes impacting most business financing and working capital loans. Although it is very likely that either the terms or kind of financing will be different from previous commercial financing arrangements, with proper preparation most business owners will still be able to obtain new financing despite these new and difficult challenges. Nevertheless, it is of critical importance that small business owners assess their most effective and practical options when facing small business finance decisions.

This will not be a simple task in view of volatile conditions which have recently impacted credit markets. A very common example of the problem is illustrated by how much misinformation and confusion there has been about business financing and working capital availability. Getting more accurate information about what is realistically possible can be one of the most difficult challenges for commercial borrowers.

When seeking to identify realistic choices in a confusing working capital management climate, a number of harsh realities must be confronted by all small business owners. There are several major factors to anticipate for most current commercial financing decisions by business owners. In the first example, additional small business loan collateral is being requested by most commercial lenders. As a second prominent example, commercial lending involving business financing and working capital have been discontinued by many regional and local banks. Third, particular difficulties will be encountered by businesses which are not currently profitable or not current in their debt payments. For a fourth factor, commercial construction financing currently has a very limited availability. In a fifth example, lenders are eliminating unsecured business lines of credit for most small business owners.

Despite the new business financing limitations just noted, there are practical working capital options for small business owners to consider. An increasingly effective commercial financing option in the midst of an uncertain economy is a merchant cash advance program based on credit card processing activity. Although this business funding option has been available for several years, it has not been utilized by most small business owners. For most businesses which accept credit cards, merchant cash advances should be evaluated as an important tool for improving business cash flow. A business financing expert who is knowledgeable about this working capital management approach (as well as other business loans) should be consulted by small business owners wanting to pursue this financing option.

Even though working capital loans are not as widely available as they were just a few months ago, this kind of small business financing is still in fact obtainable. Since some of the largest providers have stopped making these business loans, the main change for business borrowers is the likelihood that they will be dealing with a different commercial lender. Because the most effective working capital financing providers are not aggressively marketing this capability, small business owners will benefit from finding an experienced and candid business financing expert to assist in evaluating realistic options.

As emphasized in this article, it is becoming increasingly important for business owners to first determine their effective business finance funding options when making commercial financing decisions. Because of recent volatility in financial markets, this task is likely to be much more difficult than most commercial borrowers realize. Even for business owners who are satisfied with their current working capital financing arrangements, it is advisable to explore commercial finance options that might be necessary if economic conditions change even further. The use of Plan B contingency financing is an important tool to assist commercial borrowers in this process.