Friday, October 3, 2008

Avoid Online Business Loan and Business Cash Advance Applications

Commercial borrowers should avoid submittals of application forms for commercial loans until after specific lender interactions. Business owners should especially avoid online applications for business cash advances and business loans, and this commercial funding article will describe how and why to avoid the online application trap involving commercial loans.
Business owners and commercial borrowers will consistently find an almost limitless supply of internet sites for commercial loans. Most business cash advance websites will include some version of an online application. Here is a four-step process for avoiding the unwise use of applications for business loans.
The first step is to avoid the initial temptation to submit a commercial loan application online. It does appear to be convenient for a borrower to apply for business financing online. Perhaps some borrowers are attracted to the anonymous nature of the online business finance application because they have been previously annoyed by sales tactics and evasive answers in loan discussions.
Many commercial lenders have contributed to the pervasiveness of online applications in large part because they are fearful of losing some competitive advantage by not having this capability. However in attempting to match their competition, business lenders and brokers are sacrificing the best interests of their commercial borrower clients by facilitating the online application approach for commercial loans.
The second step is to understand why it is essential to avoid an online application. Applying for commercial loans via a website is similar to submitting a resume without previous research or discussions when seeking employment. What makes an online business loan application even more risky and inadvisable than the anonymous resume example is the usual inclusion of tax identification numbers and other sensitive financial data on a commercial funding application document.
Online applications have several critical problems. First, there are always potential security breaches during transmission (as well as before and after transmission). Second, there is a significant loss of control by the commercial borrower in the use of their social security number or tax identification number for checking credit (since many online application processes will result in checking credit before any personal conversations occur). Third, most commercial loans are simply too complex to initiate by an oversimplified automated process. Beginning the business cash advance or commercial mortgage process with automated applications is similar to skipping pre-game warmups and coaching pep talks prior to kickoff in a football game. The easiest approach overlooks too many essential preliminary steps.
A suggested third step is using an alternative and improved approach to the online business loan process. The simple and pragmatic solution to the online application dilemma is to insist on preliminary personal discussions with an experienced advisor before submitting any form of commercial finance application. A suitable and ethical commercial lender will not ask a commercial borrower to submit any application until the borrower has completed a thorough discussion with the lender confirming that financing is appropriate for a specific financial situation.
Of course it should be anticipated that some commercial lenders and brokers will attempt to minimize the potential problems associated with an online financing application. In such situations, borrowers should search for a commercial loan advisor who routinely emphasizes an individualized and conversational approach to commercial funding.
The fourth step is to explore additional resources that will facilitate a better understanding of complex finance issues. The Commercial Real Estate Loans Guide and The Working Capital Management Guide are two examples of financing resources that will provide strategies for many problematic circumstances dealing with small business cash management.
Stephen Bush is a small business cash management expert - learn how to avoid problems with business loans and obtain candid business cash advance advice at AEX Commercial Financing Group =>
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Isa Reyes said...

Interesting post. I'm planning on running a business soon, so this will be very helpful. I'll have to keep it in mind, especially during these tough times. I can use all the help I can find! Lately I've been thinking about buying a business instead of starting one from scratch. I'm a little on the fence though, and I'm trying to weigh the pros and cons. Do you have any advice for this possible decision? Thanks.

Sarah Q. said...

@Isa - Yeah, right now is a tough time to be a small business... Or any business in general. But hey, if you can survive this economy, then you should be able to survive anything. If you are thinking about buying a business, then don't forget to do your due diligence. Find out where the company you are planning to purchase failed. And don't forget to find out what is even available in your area. I know there are sites like, which is like this online global marketplace where you can buy or sell a business. Or if you want, just invest in a business or find a lender. I also suggest looking into your local small business group. They should also know what's going on in your area.
Good luck!