Table of Contents

Acknowledgements	viii
Author's Notes to Readers	x
Introduction	xi
Prolog	xiii

Chapter 1: Your Lender's Reasonable Expectations

Know What You Signed	3
Timely Payment of Principal and Interest	9
Honest Communications - No Surprises	13
Reliable Financials	14
Commitment to Forecasted Performance	20
Loan Covenant Compliance	22
Lender's Security Interest in Assets	27

Chapter 2: Recognizing the Danger Signals

Inexperience or Frequent Changes of	31
Lending Officers
Inability to Access Your Lending Officer	35
Unreasonable Performance Expectations	36
Covenant Violations & Solutions	37
Unmanageable Reporting Requirements	40
Frequent Loan "Restructurings"	41
Gaining Time - A Process	43
Risk Ratings & Modifications	45
The "Bail Out!"	46

Chapter 3: The Borrower in Trouble

Loss of Trust (Yours or Theirs)	51
Tightening of Loan Covenants	54
Credit Enhancements Sought	55
Personal Guarantees - Collateralization	56
Interest Rate Increases	58
Unexpected Appraisal Requirements	59
Forbearance Fees	63
Loan Transferred to Workout Dept.	65
Special Assets Group	65

Chapter 4: Pitfalls Out of Your Control

A Perceived Industry Stigma	73
Loan Approvals: Who, Where, When?	76
Bank Mergers / Acquisitions / Closings	77
Regulators and their Impact	80
Environmental Concerns	81

Chapter 5: What You Don't Know About (But Should)

Personal Guarantees & Their Options	89
Subordinated Debt	94
Key Man Insurance & Proceeds	95
Purchase-Money Security Interests	98
Interest Rates & Lender Fees	101
What (Really) Happens at Credit Committee	118

Chapter 6: Your Worst Case Scenario

Emergency Procedures - Now!	125
The 30-day Letter has Expired	137
Lender's UCC Rights & Remedies	141
Preservation: Your Life Blood - Cash Flow	145
Transferred to Loan Workout - Manage it!	148
Legal Counsel and the Borrower - Time	154
for Tactical Planning
Do Not Provide More Ammunition	156
Effecting a Loan Officer Change	157

Chapter 7: Take Charge of Your Banking Destiny

Fully Maintain Your Current Relationship	161
Tailoring Your Financial Covenants	163
Enhancing Collateral Values	167
Putting it Together - A Needs Worksheet	176
Structuring Your Own Terms & Conditions	179
Pro-Active Selection of Your Next Two	192
Lenders
Put Prospective Lenders to the Test	200
Evaluating Proposals Received	207
Leveraging Lenders - Caution	216

Chapter 8: Specialized Lending

Overview	221
Asset-Based Lending	222
Factoring	238
Purchase Order Financing	244
Mezzanine Lending	247
SBA Loans & Loan Guarantees	249
State & Municipal Finance Offerings	253
Employee Stock Ownership Plan ("ESOP")	255
Debtor-in-Possession ("DIP") Financing	256

Chapter 9: Effective Sourcing of Borrowed Funds

Traditional Lenders	261
Alternative Lenders	263
Locating Alternative Lenders	269
About Loan Brokers	274
Loan Participations	280
Debt Layers /Strips/ Hurdles	282

Chapter 10: Getting Your Share in Difficult Times

Financial Management Relationship	287
Techniques

Chapter 11: Close to Home

The Management Team & Succession	303
A Board of Directors - Why Not?	307

Chapter 12: Your Winning Financing Package

The Outline - The "Press Kit"	311
The Well Defined Business Plan	315

Chapter 13: The Financial Manager's "Watch List"

Action Guidelines for the Business	327
Leveraging its Commercial
Borrowings: Monitoring Key Risk &
Exposure Issues

About the Author	355
Index	358