You want your lender to be on your side, not working against
- It's not my fault, the economy is terrible!
Your lender hears this excuse from everyone, and she is tired of
hearing it. Yes, the economy sucks, but a weak economy doesn't mean you are entitled to an infinite payment
holiday. If your business doesn't have cash flow to make payments, the reason why cash flow is weak is largely
irrelevant. Your lender wants to hear how you are going to make it work. Anyone can make excuses.
- Your bank got government money, so you should help
Your workout person is just like you, except his job is to work
with SBA borrowers who are struggling. The last thing they want to hear is a smarty pants customer who is throwing
government bailouts in their face. None of that money went directly into their pocket, so don't be a brat and taunt
- If you give me another year, the business will get back on
If you have already had a deferment (or two) totaling 6 or 12
months, your lender is running out of patience, and you are running out of time. Don't be surprised when your
lender squashes your request for more time. If it's been over a year since you made a regular payment, don't count
on getting any more time for things to "get back on track".
- Your bank will lose money if you shut me down, so it makes no
sense to do that!
The vast majority of loans that are SBA back have collateral
deficiencies. This means that more often then not, you owe the bank more than the collateral securing the loan is
worth. While the collateral position can impact how your account is handled, there will come a time when your
lender decides that your business will not make it, and make a move to shut you down. They understand there is a
collateral deficiency, but that fact in of itself will not stop a lender from shutting you down. If you aren't
paying anyway, they reason, why not liquidate the assets so they can move on to another business who might have a
chance to survive?
- I didn't realize you wanted me to make a payment, I thought you
were working on a modification/deferment.
ATTENTION! If you still have a loan balance, then you are expected
to make payments, even while negotiating a modification or deferment. From start to finish, it sometimes takes 2, 3
or 4 months before everything is signed, sealed, and delivered. Many lenders want you to make the "proposed"
payment even before you formally execute the documents. If you are unsure, confirm with your lender what is
expected of you.