Small business owners will be more likely to avoid serious future business financial problems with working capital management and commercial real estate loans by exploring what is wrong with business financing and commercial loans. This is not a hypothetical problem for most commercial borrowers, especially if they need help to determine the choice of practical small business financing available to them. Bankers and banks responsible for financial destruction recently seem to say that even if something is truly wrong, everything is fine now in the world of commercial loans. Nothing could be further from the truth. Commercial lenders make serious mistakes, and according to popular expression, if business lenders and business owners forget this error, they are destined to repeat it in the future.
Greed seems to be a common theme for some of the most serious business financial mistakes made by many loan institutions. Surprisingly negative results are produced by efforts to produce fast profits and returns that are higher than normal. The bankers themselves seem to be the only surprised losses that they produce. The largest small business lender in the United States (Cit Group) stated bankruptcy after two years trying to make other people pay their mistakes. We have seen a record of the Bank’s failure rate, and by most of the largest bank accounts should be permitted failed but instead supported by artificial government funds.
When making loans or buying securities as referred to as toxic assets, there are many examples where the bank fails to see cash flow. For some small business financial programs, the income commercial borrowing process is declared used in which the return of commercial borrower taxes is not even requested or reviewed. One of the most prominent business lenders aggressively using this approach is Lehman Brothers (which proposes bankruptcy due to a number of questionable financial transactions).
The bankers are obsessed with producing rapid profits that are often lost from the basic investment principle that assets assessment can be rapidly reduced and not always increasing. Many business loans are resolved where commercial borrowers have little or no equity at risk. Banks almost do not invest cash (as little as three cents on dollars) when buying toxic assets in the future. A clear assumption is that if there is fluctuations down the value, it will be a token of three to five percent. Actually we have now seen many commercial real estate values decreased by 40 to 50 percent over the past two years. Commercial real estate proved to be the next toxic asset on their balance sheet for many banks that make original commercial mortgages on the properties of the business. While there is a large government bailouts to a bank that has toxic assets based on a housing mortgage, it looks like the bank will receive financial assistance to cover losses of commercial real estate loans. As a result, realistic expectations are that the commercial financial losses can produce serious problems for many banks and other lenders over the next few years. As recorded in the following paragraphs, many lenders have drastically reduced their small business financial programs.
Inaccurate and misleading statements by commercial lenders about their loan activities for business financial programs for small business owners is a sustainable problem. Although banks have usually reported that they are normal loans with financing their small businesses, the actual results show something very different from objective standards. It is clear that lenders prefer not to admit publicly that they do not loan normally because the impact of negative public relations will cause this.
