I believe that 2010 will continue to be a difficult period for the commercial real estate sector; unemployment will remain around 10%, new construction starts will be limited, the total value of closed transactions will be low, and various other industries, including heavy commercial real estate users will continue to struggle. 

However, all of this negativity will provide opportunity for investors, owner/users, and tenants as property owners deal with increasing vacancies, looming note payments, and a sector that will have continued difficult times for an additional 12-18 months.  There may be panic and concern , but this can also be perceived as opportunity. Across commercial real estate sectors, there will be opportunity throughout 2010 to improve your lease terms or lease space, increase your real estate investment portfolio, or simply put your business into a better facility for future growth. 

The only significant downside to our new year is that this abundance of opportunity will be difficult to leverage without cash.  The strict lending climate of financial institutions will limit lending to those with optimum credit and an ideal project. Banks are still trying to figure out whom to blame for their self-serving lending spree, implosion, and government sponsored bailout so the return of lending normalcy is still several years away for the majority of borrowers.

So where does that leave the rest of us growing private business owners struggling to keep the doors open, inventory stocked, and valuable employees while orders and sales decline?  Luckily, there are options that can be utilized to fund the buying opportunities of 2010.

Family:  I think it is fair to say that a majority of private business owners, at one time or another, have gone to the dinner table of family members,hat in hand, to ask for some financial assistance with their business. If one or several family members have the means, then a careful explanation of the upside potential of 2010 could yield the business owner the necessary capital to leverage the available opportunity.  

Friends:  You go to parties, on trips, and games together- you watched them get married, start families, and even stayed up late more than once to listen to a problem; why not make money together?  Friends can be another great source of capital in tight credit times.  Keep it simple, professional, and don’t hesitate to explain the potential downside. 

Syndication: This is a term that has again recently gained popularity in real estate circles.  It sounds much more important than it is, but in general, syndication  is the collection of two or more investors into a recognized legal group in order to pool resources and make a larger purchase then any one person could do alone.  In short, you make a pitch to your softball team, 8 guys come on board with funds, you form a holding company of some kind with the assistance of tax and legal professionals, and you have formed a syndicate.

Private Lenders: These are high net worth individuals operating alone or under a legal construct that lend out funds to groups and businesses that meet their investing criteria.  Often specialized in one area or another, they are more familiar with the business of their intended borrowers then most other lending institutions and can better assess the risk and potential reward.  

Hard Money Lenders:  These are individuals or groups who fund loans that are unable to be funded elsewhere.  Most of these loans are short-term with higher than normal rates and terms, but if it is the only way to get the deal done they can be a valuable resource.  Keep a short list of these guys and use them if necessary in the 11th hour to close the deal and make a profit.

Small Local or Private Banks: I have always been a fan of small local or private banks. The difference is that you are more than a faceless account number, you are not the generic Mr So & So who is in manufacturing. You are Tony, Roberts younger brother who makes parts for jet engines over on the old Simmons’ property.  The point is; they know you, they know your business, they know your property, and they will give your loan a little more latitude because you are a participating member of the community. 

Find your local private bank, open an account, take the president to lunch or a round of golf, and they will help your business grow one day.

These are just a few of the funding avenues available to the private business owner during difficult lending climates. For 2010 you should look into all of them.