By John Hallal

Business today faces a significant challenge in gaining access to capital to expand operations and develop new market share. With uncertainty and turmoil in the global markets, each event can undermine a firm’s ability to make requests of the credit markets. Despite the illiquidity of some investment vehicles, company leaders must obtain capital to grow their businesses and increase profits.

In times past, a locally owned business’ managers simply approached a neighborhood bank and filled out an application. If the firm had met previous payments and obligations on time, the local banker approved the loan and devised a payment system that worked within the business’ revenue streams and cash flow, while meeting the bank’s goals of creating returns for shareholders.

Some banks remain unaffected by the recent subprime mortgage crisis. These institutions retained sound lending principles and did not favor high interest in lieu of principal payments. Of course, many local banks continue to issue loans, but especially for branch banks, the criteria for extending credit have become much stricter than in years past. If a business owner can develop a relationship with a local bank that preserves a measure of autonomy, he or she holds an important card as a developer of local jobs, reputation, and tax revenue.

Commercial lenders not related to banks provide a valuable resource for companies that either do not have a strong local retail banking resource or have exhausted these insular organizations. Corporate leaders unused to more restrictive lending models often express concern about the relationship of assets and collateral to the direction of commercial borrowing. They need to realize, however, that these organizations facilitate funding for companies that do not qualify for the current requirements of institutional lending.

While such methods may seem exotic and even worrisome for some business owners and management, some of today’s companies rely on financial tools that experts would have considered extreme even a decade ago. Business finance has become far more specialized than in years past, while some traditional banks maintain standards set in the 1950s, when companies were either poised for mergers and acquisitions or in a position to overtake competitors in a city or region.

About the Author: John Hallal provides businesses with a wealth of experience in legal and financial resources aimed at growth and development. Possessing a keen ability to identify companies with profitability potential, John Hallal helps enterprises find and nurture new funding avenues.