Seven Steps to Working With Lenders
If you’re in danger of defaulting on a loan, or need new sources of cash, here are seven steps to help you succeed:
Make the first move. The more proactive you are and the earlier you approach your lenders, the more options will be available to work out a deal.
Have a plan. Assemble your attorney, your accountant, and your head of marketing to create a plan to present to your lenders on how you will move the business forward.
Know your rights and obligations. Review loan documents with your attorney for clauses that can help your negotiating position. Your biggest leverage may be the time and money it would take to foreclose.
Connect with the decision-makers. Time is an enemy; you want to present your plan to the people who can make a decision quickly, not someone who has to pass it along to a committee in another state.
Get rid of the emotion. Don’t be stubborn about cutting prices or cutting staff. You must show the lenders you’re serious about reducing costs and increasing cash flow.
Provide constant updates. The more communication with your lenders, the better. Keep them informed of your progress or when you change strategies.
Pursue alternative financing. If traditional financing dries up or banks won’t renegotiate, consider private lenders, who can be more flexible and creative in structuring deals.