Book Excerpts

Author’s Notes to Readers

There are a number of different approaches to consider as you set about reading "$urviving Your Business Debt". You may read each chapter in the order presented. Chapter flows present the practical development of the commercial loan relationship: from the loan application, credit approval and closing, through daily usage of the loan(s) provided, and on to problem developments, strategies and tactics to defuse difficulties, worst-case scenarios, identifying and attracting replacement lenders and financial relationship management techniques. If the reader is not dealing with pressing situations at the moment, this continuing development scenario provides an overall “flow” to the entire process.

The reader may also select specific Chapters, or topics within a Chapter, to address a current situation. If targeting a specific concern, it would still be wise to cover all chapters as ideas may be developed elsewhere that could further benefit the current situation. Frequently there are references in one Chapter to related specifics in another. The Index may also be of help.

Why the Book?

The reason I wrote "$urviving Your Business Debt" is to enable business Borrowers to understand, evaluate and effectively deal with the many difficult, even perilous business situations. These may be brought on either directly by the Borrower or by inexperienced, uninformed, overzealous, or disinterested Lenders. Many business Borrowers will at sometime find themselves subject to the stressful business finance situations described. However, with the information contained within this book, Borrowers can be both forewarned and forearmed. They will be able to employ strategies and tactics provided which may save their business, their fortunes and - not least important - their peace of mind.

"I want you to survive, and ultimately prosper, from the way you handle your business borrowings."
- Ken Easton, Author

CHAPTER 7: TAKE CHARGE OF YOUR BANKING DESTINY

FULLY MAINTAIN YOUR CURRENT REPLATIONSHIP (First excerpt of nine sub-sections)

It may be in a Borrower’s best interest to continue to work with his current Lender’s commercial loan department or its loan workout group, for some weeks (or months) even when contemplating a move. A Borrower’s strategy may include:

Attracting a new Lender
Attracting a non-traditional Lender
Achieving a reconciliation with the current Lender
Seeking a Buyer, equity funds or a Merger Partner for the business

It is imperative that the Borrower continues to maintain the confidence of the current Lender to the fullest extent practical, considering the current situation, the advice of the Borrower’s legal counsel and professional advisors.

The obvious reason for maintaining a good relationship with a Lender is that there must not be any reduction in the current Lender’s financing commitments while the Borrower seeks a change or amendment(s) to the existing relationship. In fact, it is possible that throughout the Borrower’s search for a new Lender (possibly lasting one to four months), the Lender may be unaware of such activities.

This scenario is preferable, since Lender will continue, as always, to provide necessary periodic loan advances and may be receptive to developing financial needs. Frequently the first time the current Lender knows the Borrower is leaving is when the new Lender calls up, the day before the loan closing, for a payoff number. It really can go that smoothly.

However, if the Borrower is in a workout scenario, it is important the Borrower continues on good terms with his Lender. In this case, the Lender is aware and requires that the Borrower seeks a replacement Lender. In this case the Lender mandates that the Borrower seek a replacement Lender. The Borrower is usually required to report the status of this search, on a continuing basis, to the Lender. It is possible that during the Borrower’s search process; even in a workout situation, the Lender will grow more comfortable with the departing Borrower. The Lender will see light at the end of the tunnel through the upcoming loan payoff. The Borrower is making progress towards an ultimate payout of the relationship. The Borrower continues all required reporting to the Lender – no matter what the numbers look like. The Borrower also responds to the Lender’s questions and requirements on a timely basis. All of these actions could be the basis for additional loans (advances) by the existing Lender to help the Borrower over the “hump” as a new Lender is in the middle of his credit analysis and approval process.

Keep in mind that the exiting Lender does not want to jeopardize the chance of a replacement Lender paying it out, so they may continue, to an extent, to assist the Borrower whenever possible – to include additional and periodic loan advances.

The Borrower should continue to demonstrate to the existing Lender that this relationship is vital to the company’s well being. It may very well be.

Some less obvious reasons for continuing to maintain this relationship, even through the loan may be paid off by another Lender in a short time are: