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    0 Replies Latest reply on Oct 26, 2009 8:02 PM by

    SBA Loan Default: What's A Business To Do? Scout
      A recent news report noted that despite all the economic indicators signalling that the US economy is out of the recession, if you judged the economy by the state of small businesses, we'd still be in a recession for sure. (If you are a small business owner, I guaranty that you are currently nodding).

      So what's a business to do if you are falling behind on your business loan? Here are a few tips to help you navigate your way through modifications, forbearance agreements, and workout specialists:

      1) Talk To Your Lender (or have someone do it on your behalf). This seems obvious, but you'd be amazed at the number of borrowers who simply stick their head in the sand when it comes to dealing with their lender. Can it be stressful to deal with the mean banker? Yes. Would it be more stressful for them to sue you and legally force your business to shut down? For sure. If the bank doesn't know what is going on with your loan, and you have missed a few payments, they have no choice but to assume that you have no intention to continue making payments on your loan

      2) Understand What You Stand To Lose. Like any negotiation, you can't get the best deal possible unless you understand what's at stake. Banks will also negotiate based on how strong or weak their collateral position is. Be sure to review your loan documents to identify what the collateral is (business assets, your home, other real estate) and who is liable for the loan (i.e. who is the borrower, and who guarantees the loan?).

      3) Be Honest - When you are talking about what's going on with the business, don't downplay the situation, but don't dramatize it either. Workout offers walk a fine line. If you claim you can afford your payment without a problem, then continue to miss payments, your banker will think you are just blowing smoke. Then again, if you claim poverty and the inability to even meet payroll, your banker won't think your business is worth trying to save.

      4) Justify Your Projections with Valid Assumptions - Projecting a 50% increase due to new marketing efforts will be completely be dismissed. If you want to save the business, your banker needs to believe that you understand the reality of the situation. (Tip: Yes, are basically telling them what they want to hear, but you need to present it in a way that makes them think its achievable).

      (Distressed Loan Advisors assists small business owners to settle and modify SBA and conventional small business loans. They can be reached through