Bank Loan
Problems and Negotiations
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It's one thing to read about other companies being hit
by a credit crunch. It's quite another to experience the
pressure yourself. But the fact is that many companies are
having trouble paying their debts. And business owners are
called daily by lending officers who want to collect.
Here are some recommendations for persuading your lender to
remain cool:
 Don't deny
reality.
First, show your
banker that you understand the problems. It's important to do
this quickly. If your version isn't convincing, things may
unravel fast. In all likelihood, the banker will push to
liquidate your assets.
Design a "get-well"
plan. Show that you know the right
medicine to take — and then take it. You should quickly
have ready a cash flow plan that lays out how you'll generate
the cash to cover your debt. To gain credibility on your
projections, corroborate information from trade journals and
other independent sources. Tap your CPA for experience in
matters like projections and cash flow.
Narrow the lender's
options. Bankers often like to suggest
that a simple way out is to bring in a new bank or new
investor. Sounds great, but in a tough business climate, it's
often fantasy. Few banks are writing new loans to companies
with problems. And finding investors isn't easy. That leaves
the bank two options: liquidation or staying with you until
business rebounds. You need to convince the bank that sticking
with you is the only real option. Use real examples of
liquidation values and how inventory and accounts receivable
values plunge when a business closes. With some digging, you
should be able to find out what happened to companies in your
industry.
Offer a bone.
In exchange for going along with you, give the bank something
it doesn't have yet. Assuming you've already provided personal
guarantees, agree to pay higher interest rates or shorten the
loan maturity with a balloon payment. What you're buying is
time. Without it, you're probably out of luck.
By following these tips, your lender should back off and
you'll be able to breathe a little
easier. | | 
