due to 3 years of loss and not strong enough cash flow. what happens next-rep told us we'd get a call from another department...what's that about and what is the best option to pay off the line-in one lump sum via personal assests or draw it out for as long as we can with a term loan?
Sorry to hear the bad news. They'll send your account to a special group that will work with you regarding your options. Ask for them to term it out at something reasonable that you can afford. Of course, if you have the assets available to pay it off in one lump sum, that will save you the interest. How much are we talking about here?
what is the whole workout process? does this happen over the phone, does someone come to the office, what is reviewed? will they need addt'l paperwork? we've discussed our options in house-we were directed by our acct that it's in our best interest to term it out ($500K) for as long as possible even though we were thinking we'd pay out of our own personal accouts and get rid of it...making our debt look much better to a new bank.....what info do you have on the whole process?
will they already have reviewed our file and make a call when they have options for us? we do want to term it out we think unless the term is too short and interest rate is too high...what is the process?
They should contact you when they have some options to present. However, I wouldn't hesitate to reach out and try to determine who your main point of contact will be. If you potentially have other lenders that might be interested, I would pursue those options too. When I worked on one of these deals, every option the original lender came back with was unacceptable to us, so we took our business elsewhere. That said, we weren't showing 3 straight years of losses, so it was easier for us to approach other lenders than it will be for you.
i have to say, you don't know how valuable and wonderful and useful, the information you give is....i really appreciate you taking the time to answer all my questions and hear my rants and worry. like you said....we don't have a great 3 year track record BUT are improving as not many architects can say these days.....we did manage to stick it thru this recession but i guess that doesn't matter to the banks. if you had an option to term it out vs. pay it out of the owner's personal assets, what would you do? and, what was it that was unacceptable to you as far as what you were offered by your workout dept-interest rate, time of loan, etc? thanks again Josh!
You'e welcome. Glad to be of help. If you can at least show improvement in your financials, that's a start. If I had the option to term it out at a good interest rate, that's probably what I would want to do instead of taking personal assets from all the partners to pay down the line. My hope would be that as soon as business improved we could allocate more capital from the business to paying down the line. But I don't know how wealthy all your partners are. If you have a load of cash laying around, you might be more inclined to just pay it off and be done with it. If I recall correctly, we were not pleased with the interest rate and the sizable chunks of principal that they were requiring us to pay up front as well.
Ok-we're now meeting with 2 other banks this week-still, btw-no word from workout dept at wells fargo. We're hoping they work with us-what are the chances of other banks working with us (smaller banks) if wells didn't want to renew our business line of credit? We want to term out the line we currently have with someone and transfer all our banking biz top new bank-how realistic is this? Probably not a shot since we don't have strong financials right now or will it be easier to get a term loan rather than a line of credit renewal? We are willing to transfer mortgages as well if bank gives us the go ahead.....how long do we usually have to wait for workout dept of current bank to contact us, btw? Thanks.
