More and more small businesses are looking for advice on reducing debt and commercial bank financing. Because of a serious shortage of commercial banking services, a logical and wise approach for borrowers is to investigate possible options for debt management and reduce their dependence on commercial debt from bank financing.
In most cases, small business owners do not openly seek commercial loan struggles with their banks. The increased inability of banks and other business lenders to provide sufficient amounts of business loans and working capital financing has produced this practical result. It seems that most businesses may have seen their business banking relationships in a loyal and friendly manner over the years. Big changes literally force small businesses to examine and revise their business financing strategies, as seen with many other business practices.
Evaluating whether there are realistic alternatives to replace current bank financing and commercial debt will be one of the possible outcomes for borrowers. Refinancing debt with a new commercial loan source will be a normal and practical result. For example, exploring business financing options to get working capital financing elsewhere is smart for businesses with commercial credit lines that will be eliminated or reduced (as is now widely happening).
It would be wise to explore commercial financial alternatives even in situations where the owner is not forced to get new sources for their commercial loans immediately. Very little notice has been given to affected commercial borrowers in the example of a recent bank that has revoked an existing commercial loan.
Small business owners analyze whether it is feasible to permanently reduce commercial debt and bank financing is an effective business financing option. With this approach, commercial borrowers will focus on reducing their overall debt rather than just finding a new home for their business loans. This strategy permanently reduces interest costs when executed successfully. It might also improve credit ratings for businesses and their owners, and this can increase interest rates no matter how much business financing might still be needed.
The strategy of permanently reducing business debt is one that tends to grow in popularity for commercial borrowers. There is a real trend between businesses and individuals to eliminate services from companies that continue to treat their customers badly. An ordinary review of a number of publications reveals that this kind of ill-treatment is rampant among banks that provide loans to small businesses. Because this disturbing trend is very clear among large banks, one viable small business financing option is whether it is feasible to find a better and friendlier (and more effective) commercial lender. To the extent that many businesses find that they still need some bank financing, it certainly seems like a reasonable goal is to make sure they find a good bank (effective) to replace a bad bank (ineffective).
