Overview of Commercial Loan Solutions - General

On this page we give a genetic overview and discussion of, general solutions to being declined commercial

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loans. Note that some of the potential solutions are simply strengths in other areas of your small business. These are typically referred to as Compensating Factors. For example, if your net cash flow on your business is below a banks standards, you may have a high amount of liquidity/cash that my compensate for this issue. Or you may have recently diversified in another subsection of your industry and it is growing nicely, etc. These strengths could help a bank see past your problems and fund your loan request.

While other solutions will be more specific to your actual issues. For example, if you are deemed to being over leveraged, a specific solution to that problem would be to bring on a partner with additional assets to "cross" to.

The other pages of this report go deeper into specific solutions for specific problems. Problems discussed are: declining trends, low cash flow, high loan to value, dealing with low credit scores, low liquidity, high personal expenses, etc. Scroll to bottom of page to see list.

General Small Business Loan Solution - How to Overcome Being Declined Financing

Here are the general strengths to look for in your own situation. If you have any of these promote them to bankers whenever you get a chance.

Cash – High amount of liquidity as compared to your loan amount and relative to your monthly expenses.
Finding a bank or lender that is really closing loans. Often borrowers are just dealing with banks that are not doing loans. Currently, this is very common.
Or dealing with another bank that may not perceive your issues as negatively as another. For example, if you have a special purpose property like a restaurant, many banks won't even look at your request, while others specialize in special purpose properties.
Great experience – Over 5 years of management/ownership is the starting point. Showing how you have succeeded in other tough times, like in a turnaround situation, is also a great point to bring up.
Low personal expenses – this show’s to the bank that you do not need to make a lot of money to cover your personal bills and that you take paying off loans seriously. High personal expenses is a major problem for many entrepreneurs.
Wait it out.
Credit Scores over 700. This shows that you have been responsible and have figured out how to meet your expenses in the past.
Other sources of income – if you own another business or rental property(s) this income may be able to “carry” you.
Bringing on a financially strong partner or one that can immediately increase your sales. You may not want to do this, but by bringing on a partner, that has either more experience or cash than you do, can be a business loan saver.
Rolling in seller financing, on purchases. This reduces the loan to value for the bank, making it more attractive to them.
Pointing out subsections of your business that may be growing. You may want to put together a profit and loss statement, broken down by the last 12 months, showing the growth on this division.
Other assets like real estate or equipment that can be used to increase the banks collateral. This is a big one.
New technologies that have made your business more efficient/more profitable.
Cutting general costs and or increasing margins on your work.
Debt consolidation that increase cash flow and would increase your overall profits.
Among others. Think outside the box, of all the positive things that are going on with your business (even if you are struggling).

Most importantly, if you are having a difficult time securing small business financing, you need to either convince the lender that your negative situation has already been resolved or that by getting the loan your situation will be. For example, if you have low cash flow now, a debt consolidation loan may significantly increase your cash flow position and resolve the problem. Know your weakness and try to address them as well as your strengths and try to promote them.

Continuation of Report: Other Common Causes of Small Business Loan Decline and Their SOLUTIONS

Small Business Loan Help Beginning of Report

Dealing With Bankers An overview of how an imperfect loan submission process works, and strategies on how to overcome it.

Commercial Loan Solutions General Overview of most of the Solutions.

How To Research Banks & avoid working with SICK banks.

High Loan To Value How to deal with being over leveraged.

Declining Gross Revenue Get over declining gross sales.

Disadvantages & Advantages of Partnerships Specifically related to loan requests.

Low Business Cash Flow AKA low debt coverage ratio's & what potential solution are.

Low Liquidity or to little cash, relative to the loan request.

High Personal Debt your personal expenses have a big impact on your cash flow, see some solutions here.

Bad Personal Credit Scores Best solutions to getting over low credit scores.

Business Debt Consolidation Loans have their own set of issues, learn best solutions here.

Problems With Other Sources of Incom e also referred to as Affiliates

Commercial Real Estate Loans

Commercial Mortgage Broker Training

Commercial Mortgage Loans Misc

Overview of Commercial Loan Solutions - General

General Small Business Loan Solution - How to Overcome Being Declined Financing