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A woman I used to work with had a sign on her desk that read "If you think nobody cares about you, try missing a loan payment." While meant to be humorous, that little anecdote says a lot about how lenders choose to service their loan portfolio. More and more, SBA borrowers are coming to us after their lender turned them down for a loan modification.

The reason for the denial? They haven't missed a payment.

Let's look at this from the lenders perspective:

If a borrower is current on their loan, then it must stand to reason that the borrower has the money to make their loan payment. If they have the money to make their payment, then they clearly don't have the need for a loan modification or deferment.

In today's weak economy, lenders are overwhelmed with loan modification and deferment requests. Due to so many applications flooding the banks, the only logical thing to do is to "take care of" the most urgent requests. In other words, banks are going to put their effort into saving businesses that are on the verge of collapse, with the first symptom of collapse being missed loan payments.

Unfortunately, the result of the thinking described above means that borrowers who are current on their loan, borrowers who have sacrificed by cutting costs, employees, and even their own salaries, are getting doors slammed in their face in favor of borrowers who simply give up and stop paying.

So what's the solution? Short of actually skipping payments (which is some cases really is the only way to get the banks attention), the best way to demonstrate the need for a modification is through cash flow analysis. In a nutshell, your cash flows need to demonstrate that the business operations are not generating sufficient cash flow to service the debt based on the existing terms. Just because you are making payments does NOT always mean that the business is generating sufficient cash flow, and that point needs to be driven home to your banker. (Note: if you are not comfortable crunching your own cash flow numbers, this is something that Distressed Loan Advisors specializes in).

Distressed Loan Advisors ( http://www.JasonTees.com ) offers expert advice about dealing with SBA Loan Default, and can be reached at 1-877-436-4533 or loanhelp@jasontees.com.

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