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The usual political example of “mixed signals” is depicted by conflicting statements made by politicians in different settings, but the use of “mixed signals” is no longer restricted to the world of politics. As banks become more connected with politics, it should come as no surprise that “mixed signals” is now as accurate in describing the financial world as it is with the political world. Unfortunately for small business financing, “mixed signals” has become a regular description that applies to business loans and working capital.

As a descriptive phrase, “mixed signals” most frequently includes references to confusion and variation as well as deception. Particularly in a competitive business world where the mere appearance of confusion or deception can be devastating, this phrase is routinely intended to be critical and negative. With this viewpoint, it is striking to see how often “mixed signals” or similar words have been used to describe current banking activities (based on a recent online search). The use of “mixed signals” seems to be appropriate and accurate (especially when viewed through the lens of commercial borrowers and business owners) because the words and actions of many banks are currently at odds with each other.

Commercial credit lines have been increasingly reduced or revoked entirely and fewer commercial mortgages are being completed in most locations even though lenders have indicated that business lending is proceeding at a normal pace. A direct result of this is confusion among business owners about the true availability of business financing and commercial real estate financing. Due to mixed signals as well as other factors, many commercial borrowers are now reluctantly admitting that banks are just not what they used to be. In a way similar to many automobile manufacturers that are now a tarnished and shriveled version of what they once were, it seems like almost overnight most banks have lost the confidence of the public. With such changes, small business owners are facing a new commercial loan environment and must adapt quickly. Because their business banker is not as likely to be up to the task anymore, small business owners should not hesitate to admit that they must look out for their own best interests.

The analysis here is intended to be a candid and practical evaluation of a situation currently faced by many small business owners. When unwinding a long-term relationship with a bank or banker, some of the same trauma that occurs when any positive relationship suddenly goes sour is likely to be present. Parties are likely to move forward after doing the best that they can. When making decisions involving potential changes, a small business owner considering whether to fire their banker should analyze the likely consequences if no changes are made. If keeping the old bank is holding their business back, either by bad advice or inadequate business financing, most business owners will conclude that they should seek a new bank.

There appears to be an adequate supply of new small business finance sources to fill the void left by the exit of many banks and other lenders from commercial lending despite the confusing and complicated lending climate for small businesses. Having a reliable and effective business loan provider to consistently support the operational requirements of their business is what matters to most business owners after all is said and done. Several outcomes can be produced by small business loan confusion. Individual circumstances will cause final decisions to vary for commercial borrowers effected by mixed lending signals. One of the most difficult issues to be considered in the process of small business finance decision-making is the feasibility of finding a new working capital financing or business financing source.

Business borrowers should be prepared to take a more personal and active role in the commercial finance needs of their business in order to increase the chances of their business surviving despite mixed signals from commercial lenders. There are a number of business financing resources which will describe specific commercial finance issues in more detail for small business owners seeking to learn more about any mixed signals they are experiencing with business loans.

Stephen Bush is a small business financing expert who has worked with business owners for 30 years. AEX Business Cash Advances and Small Business Finance Programs

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