With all the bank bailouts going on, can’t I at least get my commercial loan modified – I’m dying here!
It seems that almost every S&P1000 company is doing it. It goes right to the company’s bottom line. Most banks are more than willing to entertain the conversation. It’s time to see if you can get your commercial loan restructured.
The scenario is very common these days: company sales are down; they just went through another round of layoffs. There’s no telling what’s in store for the future. What’s next? Have you considered trying to get your bank to restructure your loan?
Most people assume that the contract they signed when they bought their building housing their business is iron clad and cannot be changed and that the only time you can renegotiate is when you are re-upping the lease via an amendment or signing a new one altogether. Nothing can be farther from the truth! It’s in the bank’s best interest to restructure commercial loans BEFORE they go bad.
Banker’s are not stupid - possibly a bit greedy, but definitely not stupid. If given the choice of having a non-performing loan on their books or trying to renegotiate a loan for a client who is facing difficulty – well, it’s an easy choice. This has been my experience, particularly with banks that are/were NOT subject to the special pay czar established under TARP –(yes, you can read into this that small banks are significantly easier to deal with than bigger banks).
Banks are under increasing pressure from the government at all levels –local, state and federal. They have no desire to be on anyone’s watchlist or be in the crosshairs of anything remotely negative about their business. That said, consider trying to get your loan restructured.
It’s been my experience that banks really do want to talk with their customers and help them solve the predicament that they are in. Case in point: I have a client that has a 57-unit apartment building in a distressed area. My clients, try as they might, can’t seem to catch a break between high vacancy and deferred maintenance. They purchased at the height of the market in 2006 and for the most part it’s been downhill ever since. Values have lost more than 50% - all my client’s equity is long gone and the bank is underwater something fierce. The key here is that my client has kept in contact with the bank. The bank knows this and has shown great willingness to try to work out a deal. So far we have two options on the table – either modify the loan or sell the property to an all cash buyer so the bank can exit and have some closure. Truthfully, there’s really only one option – the sale, but we are running through the exercise.
At the end of the day, my prediction is that my client will part with some minimal amount of money and then my client and the bank will part ways. No messy lawsuits, liens or dings on their credit. Nobody is happy, but hey, it could’ve been a whole lot worse. Moral of the story – keep talking with your bank and get someone to help you negotiate with them. It’s an ugly situation but getting a seasoned pro in to help can make it a lot better than what it would have been otherwise.
***
Greg Royston is a licensed attorney in California as well as a licensed real estate broker. His transactional law practice caters to individuals and small businesses with particular emphasis on business law, tax and real estate matters including leasing, acquisitions, dispositions and commercial loan and lease restructuring. Before practicing law, Mr. Royston was in public accounting (formerly part of the Big 8, now the Final 4) for eight years offering tax, estate planning and benefits consulting services specifically to high net worth clients and small and medium sized businesses. For consultation, he can be reached at 310-525-3713 or greg@sbaylaw.com.
No comments:
Post a Comment