This report is designed to produce a concise explanation of current small business cash management issues by describing working capital options in six words. This analysis is one of several overviews about business banking problems and commercial loans. As suggested in the analysis below, even when there are substantial difficulties to be expected with most current efforts to obtain working capital, the entire process should be more effective for small business owners when major business financing obstacles are both understood and anticipated.

As the initial observation, "banks are not an effective solution" for almost any small business working capital financing situation. Many banks in every region of the country are routinely reducing or eliminating business lines of credit extended to small businesses. Even though commercial loan activity for banks continues to decline steadily, most bankers have continued to state that they are providing normal levels of business financing. Whether a small business needs a traditional working capital loan or a merchant cash advance based upon credit card processing activity, the commercial lender willing to provide the funding is increasingly unlikely to be a bank. In fact, it has become common to hear phrases such as "thinking outside the bank" and "business loans without banks" precisely because bank financing for small businesses has become so hard to obtain.

"Avoid a long and winding road" is the second illustration of six words to describe working capital. This refers to the importance of determining if business financing is actually available from the commercial lender in question. It has become an unfortunate reality for commercial finance applications to take several months only to find out that funding is declined in the current business lending climate. Because such unnecessary delays have become so common, business owners should be prepared to watch for similar signs. In reality this process should be finalized in three weeks or less, and it should be possible to determine within just a few days if commercial financing is feasible for a specific business need.

The third example of six words describing working capital finance is "working capital experts will be necessary" because there are so many potential reasons for small business owners to be confused by recent business financing changes. Even without the current commercial banking problems, the use of commercial finance experts would be a prudent step. When commercial borrowers are also asked to deal with evaluating both new business funding sources and new working capital options, finding a business financing expert to help should be a practical solution.

The final description is "working capital management must be improved". Because other forms of small business financing such as commercial real estate loans have also been reduced or eliminated by so many banks, business owners will discover that working capital options now assume a higher priority. Short-term financing will become a mandatory "plan B" in most cases if a commercial mortgage cannot be refinanced to provide needed funding. This can result in unexpected improvements such as the real possibility of reducing credit card processing fees when obtaining business cash advances.

Working capital options have become an important topic for small business owners during the recent commercial lending crisis. These alternatives include merchant cash advances and working capital loans as well as analyzing if credit card processing costs can be reduced. To keep these explanations concise, we provided a series of six-word descriptions about working capital management. Additional small business financing illustrations can be found in separate reports that include "seven words to describe commercial mortgage loans".