It’s critical for your business in Kentucky to stay afloat, but if you are having trouble making your business loan payments, you shouldn’t panic. Instead, work out a payment plan with your lender to keep your company running. Here are some options that may be available for you.
What can trigger a business loan workout?
The first and most obvious trigger for a business loan workout is financial difficulties within the company. If your business is not generating enough revenue to cover its expenses, you will likely start to miss loan payments. At this point, you will need to work with your lender to negotiate a new payment plan.
Another trigger can be a bank acquisition or change in lending policy. If another bank acquires your lender, the new bank may want to review your loan and decide if it is a good risk. Also, if they change their lending policy, you will be forced to develop a new plan for loan repayment to keep your business running.
What are some of the available options?
Notify your lender of your financial situation. When you’re having trouble making business loan payments, the first thing to do is to contact your lender and explain your financial situation. You can then ask them if they are willing to work out a new payment plan. If they agree, get the terms in writing so that there is no confusion later on.
You could refinance your loan or consolidate your debt. Refinancing is when you take out a new loan to pay off the old one. This can be a good option if you can find a lower interest rate. Consolidating your debt means taking out one large loan to pay off multiple smaller loans. This can help reduce your monthly payments and make it easier to manage your debts.
If all else fails, you may need to declare commercial bankruptcy, preferably Chapter 11. It gives you the opportunity to reorganize to keep your business afloat. However, this should be your last resort as it will have a negative impact on your credit rating.
There are many options available to businesses that are having trouble making their loan payments. Just ensure that your choice will prevent you from defaulting because your lender may take legal action against you and your business.