Commercial borrowers will frequently discover that lenders and business financing brokers are not adequately proactive about commercial loan obstacles. To address this, I have published a related business loan article about business lenders to circumvent. The central point of this article is about key commercial financing obstacles which business borrowers and lenders often fail to see in time.

Unexpected circumstances can create chaos with business financing, and commercial borrowers should be prepared in advance for these commercial loan possibilities. There are a number of business financing problems to be avoided with a commercial loan. Difficulties with a typical business loan are probably more common than most commercial borrowers realize.

Although some of these obstacles might be unavoidable, in most cases these business loan challenges can be overcome. By anticipating these recurring business financing problems, commercial borrowers and their advisors will be more able to take corrective action before it is too late.

(1) Difficult Business Financing Situation Number 1: Sourcing/seasoning assets and seasoning of ownership. This particular commercial loan problem will not be relevant to all business borrowers. However, if it is relevant, commercial borrowers should seek out a lender without sourcing and seasoning requirements or limitations.

For a purchase, some commercial lenders will want documentation about where the down payment is coming from (sourcing). Many commercial lenders will also require business borrowers to document commercial loan down payment funds over several months (seasoning). Seasoning of ownership involves the minimum time someone has owned a commercial property before they can refinance.

(2) Difficult Business Financing Situation Number 2: A borrower wants to use a substantial amount of subordinated debt (a seller second or other secondary financing) to reduce the amount of cash needed to purchase a commercial property.

Commercial mortgage lenders will often not permit subordinated debt. With a business loan from more flexible lenders, a business borrower will not encounter restrictions on the use of subordinate financing and will decrease the down payment required.

(3) Difficult Business Financing Situation Number 3: A commercial loan that won't work without long-term financing. What is long-term financing for a commercial loan? Some commercial lenders view 3-5 years as the longest period before business financing will be subject to a balloon payment.

If that sounds like short-term business financing instead of long-term, there are business lenders that can arrange 30-year commercial mortgage loans. Longer-term business financing will often be the critical difference that facilitates a successful business investment because new business financing will not be required for many years and commercial loan payments will also be reduced.

(4) Proactive Commercial Loan Example Number 4: Business financing recall terms. Business loan recall conditions will often allow the commercial lender to force the borrower to repay their loan before the normal loan expiration. This possibility is not relevant to business borrowers if their commercial loan does not contain such recall terms.

Traditional lenders frequently put recall clauses in their business financing provisions. The conditions which can trigger recalls differ and include regular evaluation of credit history and financials by the commercial lender. If required levels of credit standards and income cannot be confirmed, the lender will enforce the recall provisions by requiring an early and immediate payoff of the business loan.

Contingency Plans for a Commercial Loan Recall: When confronted with a commercial mortgage recall notification, borrowers will have little recourse other than to seek refinancing. When considering alternative sources of business financing, prudent borrowers will eliminate potential lenders that impose similar recall provisions in new financing.

To avoid a potentially disastrous recall scenario, commercial borrowers would be wise to consider only commercial loans which do not have recall terms. For commercial borrowers who have recall provisions in their business financing agreement, it will be equally wise to consider refinancing their business loan before a recall occurs so that refinancing is accomplished according to the commercial borrower's timetable.

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