Financially Troubled Businesses

Loan Workout Services

You’ve been taken by surprise.  You banker, who you’ve worked with for years, just called to tell you your loan has been classified as a troubled loan and management of your loan has been assigned to the Loan Workout department.

You immediately say, “What is Loan Workout and what does this mean for my company?”

Loan Workout is the department that manages loans classified as having a too high a risk of default to handle in an ordinary fashion. You may have already missed payments or violated loan covenants or the bank thinks it looks like you will in the near future. Loan Workout is staffed by people that know how to exit a relationship and get that classified loan paid off.

That’s right. You bank has decided to end it’s relationship with you. They may not give you a deadline right now for you to find another bank to pay off your loan, but they are heading in that direction.

What will happen next and what should you do?

Reporting requirements will increase:

  • Monthly reports will now be required weekly.
  • If you have a line of credit that is close to its limit, you may need to report to them daily.

The bank may not be ready to call your loan yet, but what they ask for might confuse and worry you. You’ll likely get requests for:

  • Appraisals of equipment and/or commercial real estate
  • Updated personal financial statements, as you likely have provided personal guarantees
  • 13 week cash flow projections, which will need to be updated weekly, and provide explanations for any material variances of actual vs budget that occurred in the prior week.

This is an experience that will likely take time away from you working on running your business.

MultiSource Financing - Business Consulting - Financially Troubled Businesses

Hiring a Business Consultant with experience in working with Bank Loan Workout departments can limit the time you need to spend with your banker. This frees you to concentrate on growing your business and making it succeed.

We focus on:

  • Keeping your banker informed
  • Accelerating cash collection of receivables
  • Finding replacement financing to free you of the additional fees charged by the Loan Workout group
  • Handling your vendors who have not been paid on time
  • Being a key advisor to you to get you through this process

We have worked as commercial lenders and have handled many loan workout situations as consultants to business owners.  We talk the language that the Loan Workout department does and can help you navigate this difficult and time consuming situation.

Contact us for a free one-hour consultation about your Loan Workout situation.

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