Is the Bank Fair and Reasonable In a Loan Workout?

"Fair" and "Reasonable" in a Workout?

I am frequently asked whether a particular Offer in Compromise (OIC) for a defaulted loan is reasonable. I am aware of the pain many borrowers feel when they determine the bank is not being "fair". Along this path is also the anger that defaulted borrowers experience when they believe the bank is out to get them, liquidating assets rather than "working with" the borrower to help them recover, of course with the promise to pay them back more than if they were foreclosed upon now.

Let me explain what you already know but are not satisfied with: The bank is not your friend.

They are a business and they follow whatever path they deem most beneficial to themselves. They are uninterested in protecting or supporting your well-being, your assets, or your business and it has nothing to do with being fair. It has everything to do with how they do business and what their goals and objectives are. In short, they are doing what they believe is either in their best interest or what they believe they are required to do, whether or not it makes sense to you. Fairness is not an issue, not a consideration, not even a distant thought. Nor are they acting mean-spirited or "out to get" you. Get it out of your mind. You signed a note, posted collateral, guaranteed payment and in default you are asked---actually demanded---to perform as you promised.

The bank is not your friend---nor your adviser or your mentor---and is only interested in its own needs, not yours. Stop pretending the bank is giving you any advice that may be in your best interest. That is pure folly. They are only interested in their own self-interest.

Maybe you have to get real and appreciate the high stakes game you entered into when you borrowed far more than you could ever possibly repay if demanded. Once you are in default that is exactly what is expected of you---repay the debt or suffer the liquidation of your assets.

We at Second Wind understand this disconnect and have devised strategies to level the playing field and put the defaulted borrower in a much better position to successfully reduce the debt and payback requirements without sacrificing assets or your business. This, too, has nothing to do with fairness or being reasonable, it's just a matter of smart business strategy and logic on our end, just as the bank is doing for itself.

"Fairness" is for the playground, not the real world. Unfortunate, but true.

What is Your Corporate Culture? is it Working? - Associated Content - associatedcontent.com

What is Your Corporate Culture? is it Working? - Associated Content - associatedcontent.com

What an interesting concept: "corporate culture". We see it all the time. Every corporation has one, good or bad.

There once was a significant regional bank, since absorbed, that always projected a snooty, unhelpful, "holier-than-thou" attitude. Most of my experiences with this bank, at any level, were filled with their ego and arrogance. It was always distasteful, and I was told by many employees how little they liked their company as they were treated with little respect.

This is an example of corporate culture: low mutual trust or respect, intense control by management, careful, precise, micro-monitoring of employees, low pay, no goodwill from customers, no appreciation from employers, meaningless incentives and meager raises. This generates a similar attitude at all levels---distrust and lack of respect. It starts at the top and permeates downward.

I have done business for years with another bank, a national one called Citizens Bank. Since I travel a lot, I manage to visit branches all over. I have always been treated exceptionally well, as if each branch I go into is my local branch where I am well-known and friendly with all the employees. Again, a distinct example of corporate culture, but in this case, a nurturing attitude from the top permeates downward throughout the business.

Review your corporate or small business culture and evaluate whether or not it is working for you and your business. Upon inspection you may find you need to make changes. Maybe your corporate culture it is not projecting what you want it to project. Maybe it starts with you.

Remember, it starts from the top and filters down. Change your approach and attitude and change the entire culture of the business.

It's Happening Again. Deja Vu. Banks Are Calling Performing Notes! - Associated Content - associatedcontent.com

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Why Loan Workout is Necessary?

It happened in the 1980s. The FDIC examined banks and when they determined that the collateral for a loan was worth less the value of the loan (in other words, the loan was under-collateralize) and therefore the bank was technically unsecured, they would require the bank to call the note and liquidate the collateral, even though the note payments were current!

This decimated thousands of borrowers all over the Northeast and Texas, where most of this occurred. Thousands of performing notes were called and the underlying collateral---mostly real estate, which had dropped in value---was liquidated for the benefit of the bank and at the destruction of the borrower. There was no way to refinance as the real estate was in fact worth less than the loan. Thus, a huge loss was recognized at the borrowers' expense.

This is beginning to occur again.

Be aware, learn from experience. It was not that long ago and history is beginning to repeat itself again. Here is what you must do to prevent this train wreck: Implement workout strategies before the bank calls your note. The debt must be reduced at least 50%, or possibly more, so it can be refinanced and the assets preserved. The only answer is debt forgiveness.

This applies to everyone, but the focused attack is on real estate developers who have inventory of unsold lots or homes that will take a longer time than projected to sell. The banks will want to write these loans off and liquidate the collateral at pennies on the dollar, then hold the borrower liable for the shortfall because of personal guaranties.

It is happening again. It is becoming more and more visible that banks, because of FDIC compliance requirements, are calling notes and demanding the collateral be turned over to the bank for liquidation or refinanced out, which is impossible at the current debt level.

Enter into a loan workout scenario on your terms and within your control, one that is designed to reduce the debt to a low enough level to support the refinancing. This works. Any other strategy will fail.

Call us for help, we can help you implement this strategy. Call Norm at 413-584-2581 and he will arrange a no-obligation teleconference for us to explore your options.

A New Twist in Outsourcing Jobs. Beware... This Will Spread - Associated Content - associatedcontent.com

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Business Talk: Crowd Sourcing

IBM has been "discussing" the possibility of "crowd sourcing" more than two-thirds of their workforce---over 200,000 jobs---in the next few years. While they refuse to acknowledge this, higher-ups in management have leaked this "discussion" so it appears to be very real.

The intent is to fire most of their engineers, developers---anyone they can---and then hire them back on a project-by-project basis. They will even encourage entire departments to spin-off into their own small business and contract for the same work they were paid to do as employees. This, of course, allows them to acquire other gainful work from other businesses---even competitors---but it appears this is OK with IBM. This is called "crowd sourcing".

The cost savings would be very significant as IBM will have eliminated the cost of their benefit package, including insurance, vacations, sick days, office space, overhead, etc. and IBM will not be paying for in-between days like, downtime between projects, and will have fixed costs for certain applications, knowing exactly what the contract will cost. The savings will be huge. IBM wins while employees probably lose. Time will tell. Actually, the theory is that both sides win as the contractors can charge higher fees, although they must pick up their administrative and overhead costs, and of course, IBM will save in a huge way.

Here is the point: Small business owners can learn from the big guys what to do in this changing economy.

Outsourcing is a factor that all small business owners should be considering. Reducing payroll and controlling your overhead are great ideas. Unfortunately, small business owners tend to fall in love with their employees and feel loyal to them, thus, they carry them on their backs, really working for them instead of the other way around.

Perhaps you should be looking at what the most successful businesses in the world are doing and take a lesson from it. Outsourcing is a factor. Buy the expertise when you need it. Subcontract your sporadic requirements, or even your major daily requirements. Have others manufacture, make sales calls, provide leads for you, service your clients, etc. Become a virtual company, hiring others to do the work on a contractual basis. Know exactly what your costs are and save the huge expense of doing everything yourself in-house. Consider doing what IBM plans to do.

It works; it is part of reinventing yourself in today's complex and changing economy. It is the opposite of what small business like to do, but maybe it is time to change horses and regain control of your finances. Maybe IBM is correct and is leading the way with a clear demonstration of how to do business now. Some will say this is beating up the employee force, taking advantage of them and getting more while paying less. IBM would say this is a practical way of doing business and that it makes financial sense.

Think about it and try it. Become more virtual, subcontract, outsource... maybe even "crowd source" as IBM is doing. This is a new age; it requires new thinking. IBM may be amongst the best run businesses in the world and it is not a bad idea to follow their lead. They are willing to outsource 200,000 jobs, most to the same employees they have now. Maybe you can do the same.

Call us at 413-584-2581 and we will arrange a no-obligation teleconference for us to explore your options.

“Small Business” Does NOT Mean 500 Employees and $10 Million in Revenue.

“Small Business” Does NOT Mean 500 Employees and $10 Million in Revenue. http://ping.fm/4FKtb

There are many definitions of a small business. One standard definition is $10 million in sales and 500 employees. That's not small business! That's big!

So, what is small business? A small business may be the family business, or just a very small business---a dozen or so employees and maybe $1 million in revenue. Small retail shops, small service businesses, architects, contractors, tradesmen, lawn care... everything that America is all about, what our towns and cities are full of: micro small businesses. That's America. That's were the rubber meets the road. That's small business, and these are the people I am talking to.

These are the people paying more than their fair share of taxes and getting a lot less in return. They're the ones experiencing massively declining revenues and ever-increasing overhead and expenses. This is where the recession is grinding us to the bone, where debt is now so high compared to revenue that we cannot survive. This is where the recession lives, in reduced revenues, increased overhead and bone-crushing debt. Micro small businesses are our neighbors, our communities, our friends.

There is no revival at this level, just pain. The larger of the small businesses are beginning to rebound and that's good, but the corner store, the local community businesses, the mom-and-pop stores, craft stores, coffee shops, ice cream shops, etc. are all suffering and going out of business rapidly and daily. The pain is intense and families are at risk. Families, homes, children... all innocent victims of this cold-blooded recession.

Yes, the "too-big-to-fail" businesses were bailed out by our government using our tax dollars. The micro small businesses were left to pick up the tab but get no benefits because they are small enough to fail without bothering anyone. Cold.

So, it is up to us to take care of ourselves, and that is our mission at Second Wind. Showing you how to survive and even prosper, to emerge successful, regain position, preserve jobs and add more. Something must be done and bankruptcy is not the answer as it eliminates the business, the jobs and the income for the owners and the families of the employees who have now lost their jobs and everything else they have built.

The answer is self-help. We must downsize our businesses if possible, reinvent ourselves and, yes, do the debt workouts because debt is killing us all. Without debt we can learn to survive and even prosper in this rough economy. Ask any small business owner---small as defined here---how things are going, and they will tell you: awful. They are being sacrificed at the altar of this recession while our government bails out big business (the "too-big-to-fail") so they remain profitable.

Micro small business is where the help is needed most and there is none.

Call us, we have answers. We have strategies that work. Downsize, reinvent and work out your debt. This is the answer.

Call us at 413-584-2581. Norm will arrange a no-obligation teleconference to discuss your options. Help is on the way. There is no reason to fail, we can help.

Let's Talk Business: Successfully Navigating the Recession. The Book is on the Way!

Let's Talk Business: Successfully Navigating the Recession. The Book is on the Way! - Associated Content - associatedcontent.com http://ping.fm/R2urP

First the blog, now the books, then... the movie?

Yes, my blog has been very successful. It's been viewed by hundreds of thousands of anxious small business owners wondering how to survive the downturn and resolve crushing debt in view of plummeting revenues, wondering what to do about businesses that are no longer profitable and how to survive and succeed in this horrendous business decline. I have been writing for a few years about exactly what to do and how to do it. Many have paid close attention and have followed my strategies... and many have survived because of it.

But, as we can all agree, a blog is a slightly more disorganized and difficult medium to navigate than a book. No real contents or organization, just daily posts on relevant topics. A hodgepodge of ideas.

Given how important these subjects are---your business survival, your financial survival and the survival of your family and your employees and their families---I have converted this blog into my first book: Let's Talk Business... Successfully Navigating the Recession. This book explores what one must do to survive the economic downturn, including chapters on debt workouts. These are lessons learned in the front lines of small business hand-to-hand combat, what works and what doesn't work.

My second book (in the works), also based on my blog, is about SBA loan debt forgiveness and workouts. My third book (also in the works) is called: Now What? Explaining What the Business Owner Must Do to Survive and Emerge Successful and Profitable. Both will be out later this year. (Available soon in e-book and hard copy versions.)

I believe these books will become field guides for small business owners trapped in a downturn economy and looking for answers as to how a business owner can manage survival and emergence, and ultimately return to profitability.

My vision is to help save America, one business at a time. My goal is to help small business owners survive, protecting the jobs and commerce that their families---and the families of at-risk employees---depend upon.

If You Borrow Money Family Loan: If you Borrow Money from your Family, Protect It.

If You Borrow Money From Your Family, Do it Right For Reasons You Are Not Even Considering http://ping.fm/tRPYk

Many small business owners borrow money from their family to support a business endeavor. Family loan is natural and occurs all the time. Unfortunately, because it is family loan, it tends to be treated loosely, less formal transaction than if money is borrowed in the normal course of business, and loans of this type rarely carry a note or UCC filing, or even a written agreement.

It makes little sense to treat your family in such a shoddy manner as you are really sacrificing their protection if you ever get into financial trouble, and this happens every day. Most family lenders say, "I can trust so-and-so... I do not need a note or a UCC filing. My relative will pay me back." It is not about trust between family members, it is about priority and payback, and protecting yourself and your family in a default situation.

Additionally, it is entirely possible (and even likely) that family loan may be borrowed even before the bank lends. Thus, the family loan is on file in front of the bank's, assuring your family priority in the case of default, which can be very helpful to the borrower for many reasons.

An astute banker or bank lawyer may require you to subordinate a family loan to a bank loan, thus removing the family from first position to collect. Though diluted, significant power remains if the family loan is documented and publicly filed (and thus considered a legitimate obligation which must be respected and dealt with) and this can play an important role in the loan workout scenario. The bias of the lenders, bank and SBA is that a family loan from a family member need not be respected or repaid, and can be ignored and rolled over for the benefit of the bank. Proper filing prevents such a cavalier attitude.

This is exactly what will happen unless the family loan is documented, collateralize and publicly filed. This does not mean your family member will hard collect, or foreclose (or even collect at all), but it does create a barrier between the bank and your assets that may be very beneficial to your loan workout and survival, as well as making certain your relative's money does get returned to them if possible.

The point being, if your family loan for your new start-up is handled impeccably from the start, in default that will serve valid purpose as the terms are enforceable and thus it must be respected and dealt with. If not defined properly, the family loan will be ignored, and not only will a loss occur, but you will have lost the protective benefit of such a filing.

Employee Profitability: Inspect Your Employees' Work Efforts For Measurable Results

You Must Inspect Your Employees' Work Efforts For Measurable Results. | Secondwindconsultants.com http://ping.fm/6Q2PU

Too many small business managers let the employees do their jobs without measurable benchmarks and thus, without measurable results. Worse, they create measurable benchmarks and do not inspect them or the employee being measured for their accomplishments.

It does not work.

People naturally fall into their own rhythm, schedule, level of accomplishment, and, in a word, productivity. However, productivity must be guided and delivered under a manager's direction, as only management knows what it is projected and therefore required for performance, and in turn, profitability. If the employee is unaware of such goals and projections, or is aware but not held accountable, and is allowed to produce whatever he chooses, then the results will be random, unpredictable and well below the requirements of the business. It is simply human nature. Even the most trusted, most effective, self-motivated employee must be given benchmarks to measure productivity, and held accountable to a performance standard.

That standard must be reasonable but profitable, and must be determined by upper management, communicated to managers and then to employees, and then measured and reported back to all involved. An employee must know what is expected of them and what is being delivered so he can achieve effective employee productivity and be successful. This can only be done through stated goals and frequent inspection.

To support this process, an employee must be adequately trained and clearly informed of what is expected and must be made aware of how successfully (or not) he is meeting those expectations.

TRACK, MONITOR, CONTROL.

Track: Measure activity against projected goals.

Monitor: Review productivity frequently.

Control: Communicate directly with employees. This includes training and other necessary requirements to support success.

This process is critical for success and must be implemented for every employee in your company, even those for whom the nature of the job makes it difficult to quantify results. Find a way; it is important and the way to manage employee productivity effectively, profitably and with success.

Track, monitor and control. Inspect results often... daily, weekly, monthly, quarterly, and annually. This is the path to achieving success. Do it

Force Revenue -- It Is Your Lifeblood.

Force Revenue -- it is Your Lifeblood - Associated Content - associatedcontent.com http://ping.fm/VPCAh

Revenues are down, the economy is terrible. What to do...? You must force revenue.

What does this mean? The answer comes in many styles and shapes, and depends heavily on the type of business you have. The important message here, however, is that lost revenue is what is tanking you and despite the awful environment, the terrible economy, widespread unemployment, no borrowing power, decline of credit card availability (and on the list goes) you must force revenues to increase, or die trying.

But how does one force revenue? Many ways:

1. Add sales people. Yes, it costs much, but utilize a top-heavy incentive plan, rewarding sales with large commissions and low base draw, churning the lust for earnings in your sales force. Reward sales people at a level above normal and reap the benefits. Many small business owners reduce their sales force and lower commissions---not the way to go.

2. Find different vertical ways to expand: internet, retail, wholesale, manufacture, import. Reinvent yourself. Force profits, force revenues.

3. Finance your sales and take risks. It may be worth it in the long run.

4. Joint venture: Lower cost, higher return.

5. Horizontal expansion. Add more locations.

6. Buy your competitors.

7. Specialize. Be an expert.

8. Expand public relations efforts, including press releases.

9. Use the internet more effectively, e.g. use social networking.

10. Go virtual. Lose the office and factory overhead and have sales reps work out of their own homes or offices.

11. Give seminars, engage in public speaking or presentations of any sort.

12. Do charitable work.

The list is endless but the point is clear: Force revenue. Figure out how to do this for your business and then do it. Remaining passive is the death knell. Force revenues.

SBA Loan Default Blogs

Hello! My blog and my business mission is about creating change...helping business owners reach their goals, helping them overcome difficult business problems and build profitable organizations. Frequently I am the last line of defense. No other way out.

Helping business owners dreams come true, helping them succeed. Helping them overcome seemingly impossible debt situations. Helping them survive, cleaning up the issues, training them and giving them a second chance...that's my mission.

Success is very important to every business owner. Every business owner wants it. I have helped many reach various levels of success through my consulting program. However, there is much to talk about as every business man or woman has unique situation and special needs requiring specific training and development.

Some are confronted with impossible debt situations requiring the skill and experience of a seasoned workout specialist. Its a tough battle but it can be done. Workouts can eliminate debt freeing the business to prosper.

I am hopeful that this blog will provide a forum for discussion and an opportunity for all of us to learn more about what is possible and maybe we can all change for the better.

I will not hold back. Write, lets talk business...and may your dreams come true! Nothing is impossible. Every issue can be overcome.

Call me, I am available at 413-549-2966. My assistant, Norm, will arrange a no-obligation tele-conference.

Our SBA Loan Default Workout Guaranty: We will never have to pay it out!

Our guaranty is a direct reflection of our success. In short, with the appropriate support from our clients including adequate financial strength to satisfy the needs of the workout and a commitment to full disclosure, we did not "lose" a deal in 2009.

Therefore, we have provided our guaranty, recognizing the difficulty potential clients have in making the hard decision to commit to us and our strategies.

Their issues tend to be as follows:

1. I will wait and see what happens.

2. I believe the economy is going to turn around and I will be fine.

3. Your strategies and projected results are too good to be true.

4. I am concerned that if I sign on, what will happen to the money I paid if it does not work out as promised.

5. “My lawyer says… my accountant says... my banker says... my wife says...” all barriers preventing the leap of faith required to join us in our successful debt workout strategies.

Thus, we have decided to demonstrate our belief in and commitment to delivering the best possible results and to demonstrate that we understand what is at risk if we fail in our mission. To support the clients’ belief in our commitment to success and to help develop trust, we have decided to guaranty our results so we too are at risk if we fail... which we never do.

Thus, we glibly say, we will never have to pay out on the guaranty as we believe we will always win with every client, and will return their money if we should fail.

This is our context. This is our reality. We act as if our clients’ money and business are ours, and we fight for success as if it is our business and family at stake. Our mission is our passion, our passion is our mission, saving America one business at a time, as we know there are no other options that preserve the assets and remove the debt and save businesses, jobs and families.

Our commitment is we will win. We ask you to trust us. We are willing to risk our money to demonstrate our commitment. We will not fail our clients. We know what is at risk. We guaranty our results.