Business Line of Credit Programs —
Working Capital Problems and Solutions
While our reporting below does include a significant number of negative commercial lending practices, our primary point is precisely that there are more small business finance problems than most business borrowers are likely to realize until they observe accounts like this one. More importantly, many (if not most) of these problems are either solvable or avoidable with appropriate action taken by business owners. As one key example, there are new and effective programs which can provide short-term working capital to many businesses. Some of these working capital options are described elsewhere within the Small Business Financing Services site. For any business owner needing help obtaining either short term financing or long-term commercial loans, please contact AEX Commercial Financing Group immediately.
Some of the most drastic measures taken recently by banks involve reductions and cancellations of business lines of credit. One of the most publicized examples was the early December 2008 closing of Republic Windows and Doors in Chicago after Bank of America cancelled the company's line of credit. This resulted in the immediate loss of about 250 jobs. A more obscure aspect of this same event was that Republic was also trying to buy (for cash) American Water Seal in Orrville, Ohio but Bank of America chose to liquidate the company instead, resulting in the loss of another 100 jobs. In response to the sudden closing of the Chicago plant, workers engaged in a sit-in protest and the State of Illinois threatened to terminate their financial activities with Bank of America. Of special note to most observers regarding this and related examples of Bank of America reducing commercial loans is that Bank of America received a multi-billion dollar cash infusion from U.S. taxpayer money that was intended to facilitate the lending of money to businesses and consumers.
Many small business owners also rely on personal lines of credit to finance some of their business operations. We have received many reports of widespread cancellations and reductions of these lending programs as well, especially those involving Citigroup (operating as Citi). Like Bank of America, Citigroup also received a multi-billion dollar cash infusion from U.S. taxpayer money that was intended to facilitate the lending of money to businesses and consumers.
In many cases, business and personal lines of credit have been eliminated by lenders (Bank of America and Citigroup are not the only banks doing this) because of deteriorating business conditions and a reduced ability to pay by borrowers. However, our reporting data indicates that for the majority of line of credit cancellations or reductions, the borrowers had an excellent payment history.
Meanwhile we have seen several banks that are willing to make working capital loans. The most notable examples are (for the most part, anyway) NOT banks which have received bailout funds. In general, these responsible business lenders have been willing to provide working capital options, either in the form of new business financing or refinancing lines of credit and term loans which have been recalled or cancelled by lenders such as Bank of America. As might be expected, such business funding is primarily limited to businesses which (1) are showing a profit based on recent financial statements and (2) are current in their debt obligation payments. For business owners that meet these two conditions and need commercial funding, please contact AEX Commercial Financing Group for immediate help.
Solutions and Working Capital Options:
- Finding new and effective sources for small business loans and working capital management programs.
- Businesses should assess their ability to sustain normal operations without relying on a traditional bank line of credit by thoroughly evaluating other business financing options such as working capital loans and business cash advance programs.
- Whenever reviewing business operations for working capital management improvements, it will usually be a productive time to evaluate other services that might be overlooked. Potential examples include credit card processing.
- For businesses not currently subject to difficulties in obtaining essential working capital financing, it should be helpful to analyze alternative business finance options in the event that circumstances should change suddenly.
Contact Information
AEX Commercial Financing Group
Stephen Bush
Chief Executive Officer
Phone: (614) 335-4901
Email: BUSH@AEXLLC.COM
