This work­ing cap­i­tal man­age­ment report pro­vides advice about how and why to avoid the online appli­ca­tion trap involv­ing busi­ness loans. Com­mer­cial bor­row­ers should avoid sub­mit­tals of any appli­ca­tion forms until after indi­vid­u­al­ized lender dis­cus­sions and under most nor­mal cir­cum­stances, com­mer­cial bor­row­ers should avoid online appli­ca­tions for com­mer­cial loans and busi­ness cash advances.

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 busi­ness bor­rower to apply for busi­ness financ­ing online. Per­haps some busi­ness own­ers 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 busi­ness finance 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 busi­ness finance appli­ca­tion. Sub­mit­ting a com­mer­cial loan appli­ca­tion via a web­site is equiv­a­lent to blindly send­ing a resume to a com­pany seek­ing employ­ment with­out any prior dis­cus­sions or research. 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 busi­ness data on a com­mer­cial fund­ing appli­ca­tion document.

There are sev­eral key prob­lems asso­ci­ated with an online busi­ness finance appli­ca­tion. 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 busi­ness tax iden­ti­fi­ca­tion num­ber for check­ing credit (since many online busi­ness finance 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. If we can use a brief sports anal­ogy, start­ing the com­mer­cial mort­gage loan or busi­ness cash advance process with an auto­mated appli­ca­tion is tan­ta­mount to the kick­off of a foot­ball game occur­ring with­out any pre-​​game warmups, coach­ing pep talks or the tra­di­tional coin toss. 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 busi­ness finance 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 busi­ness financ­ing is appro­pri­ate for a spe­cific busi­ness situation.

Com­mer­cial bor­row­ers should antic­i­pate that many lenders and bro­kers will deny any poten­tial prob­lems in using their online appli­ca­tions. In such sit­u­a­tions, busi­ness 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 busi­ness finance issues. The Work­ing Cap­i­tal Financ­ing Guide and The Com­mer­cial Real Estate Loans Guide are exam­ples of resources for busi­ness financ­ing strate­gies address­ing small busi­ness cash man­age­ment and busi­ness financ­ing problems.

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