Commercial Modification » prudent loan workout http://commercial-modification.com/commercial_modification_blog Commercial Loan Workouts, Commercial Loan Modifications and Commercial Short Sales Tue, 05 Jul 2011 21:14:07 +0000 en hourly 1 http://wordpress.org/?v=3.2 How to Use a Prudent Loan Workout When the Business Is Affected by an Economic Downturn http://commercial-modification.com/commercial_modification_blog/how-to-use-a-prudent-loan-workout-when-the-business-is-affected-by-an-economic-downturn/ http://commercial-modification.com/commercial_modification_blog/how-to-use-a-prudent-loan-workout-when-the-business-is-affected-by-an-economic-downturn/#comments Thu, 06 May 2010 08:22:24 +0000 CLR Staff http://commercial-modification.com/commercial_modification_blog/?p=469 Continue reading →]]> A prudent loan workout is often necessary for a commercial property during an economic downturn when a business is severely affected. This could be due to the loss of tenants for multi-unit dwellings, apartments, motels, hotels, strip malls, office buildings and many others. With the incoming revenue stream substantially reduced, the company may no longer be capable of coming up with the monthly payments.  What could be worse is that the end of term may be fast approaching and with it comes the need to pay for the huge balloon payment. Fortunately, one possible solution is to negotiate a commercial loan modification with the lender to reduce the payments, defer the payments, or extend the term.
Normally, banks are disinclined to permit any changes to the loan terms but with the economic crisis, it would be disadvantageous for them to foreclose the many properties that are in trouble. They do not only lose the revenue flow but they will also have to sell these assets at very low prices after spending a substantial amount of money to push through with the foreclosure. Moreover, businesses may be able to rely on a commercial forensic loan audit to make it easier for them to convince the banks to restructure commercial real estate loans. The audit process is designed to uncover any flaws in the original agreement and if there are any, these could be used to enhance the possibility that the request for a prudent loan workout would be approved by the lender.
A prudent loan workout is often necessary for a commercial property during an economic downturn when a business is severely affected. This could be due to the loss of tenants for multi-unit dwellings, apartments, motels, hotels, strip malls, office buildings and many others. With the incoming revenue stream substantially reduced, the company may no longer be capable of coming up with the monthly payments.  What could be worse is that the end of term may be fast approaching and with it comes the need to pay for the huge balloon payment. Fortunately, one possible solution is to negotiate a commercial loan modification with the lender to reduce the payments, defer the payments, or extend the term.
Normally, banks are disinclined to permit any changes to the loan terms but with the economic crisis, it would be disadvantageous for them to foreclose the many properties that are in trouble. They do not only lose the revenue flow but they will also have to sell these assets at very low prices after spending a substantial amount of money to push through with the foreclosure. Moreover, businesses may be able to rely on a commercial forensic loan audit to make it easier for them to convince the banks to restructure commercial real estate loans. The audit process is designed to uncover any flaws in the original agreement and if there are any, these could be used to enhance the possibility that the request for a prudent loan workout would be approved by the lender.

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]]> http://commercial-modification.com/commercial_modification_blog/how-to-use-a-prudent-loan-workout-when-the-business-is-affected-by-an-economic-downturn/feed/ 0 A Prudent Loan Workout Can Save Your Business http://commercial-modification.com/commercial_modification_blog/a-prudent-loan-workout-can-save-your-business/ http://commercial-modification.com/commercial_modification_blog/a-prudent-loan-workout-can-save-your-business/#comments Thu, 14 Jan 2010 04:28:38 +0000 CLR Staff http://commercial-modification.com/commercial_modification_blog/?p=327 Continue reading →]]> A prudent loan workout may very well be just the arrangement you require in order to save your business. Originated through the lender, this is a way to help relieve some of the financial stress that often goes with the business fallout of an economic crisis. Also known as a prudent commercial loan modification, these loans are strictly for businesses that have been struggling to make reasonable payments to their lender in a timely fashion. In reality, a prudent loan workout may be the only thing that is standing between your business and a going of out business sale.

An FDIC prudent commercial loan workout is started by a forensic review of your books. This way, both you and the lender are completely aware of how much your business is currently making and how much it will be anticipated to make in the next few years as the economic stability regains its footing.

In some cases, a prudent loan workout will result in a temporarily smaller payment now in the structure of a balloon payment. This can be considered a risky maneuver by those who are skating on thin ice and aren’t sure that they will bounce back as anticipated.

The plain and simple truth of the matter is that more businesses need help today than ever before. The lender loses more by having to go through the legal process of a business eviction than it does in rearrangement of the terms of the loan. The ultimate goal of a prudent loan workout is to ensure that both the business owner and the lender can return to seeing eye to eye when it comes to making timely, full payments.

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