Escaping The Bank Special Loan Workout – That Get Out Of Jail Free Feeling In Business Financing special loans

OVERVIEW – Information on exiting a special loans category when your business credit facilities are terminated by Canadian chartered banks. A bank workout has various exit options.

Special loans is of course the name for your company’s relationship breakup with your bank, and Neil Sedaka had it right when he penned ‘ Breaking up Is Hard to Do! special loansHow can business owners successfully emerge from a bank workout scenario and what options are available to do this? Let’s dig in.

We’ve always been a little bit amazed at the surprise of some clients who advise us they didn’t see it coming relative to having their bank facilities called. Suffice to say that the implications of this ‘relationship termination ‘ can be significant for your business if not attended to in the proper manner.

From the banks perspective it’s a simple case of your company being deemed over and above the risk level they are prepared to take in an ongoing bank relationship that might have both revolving and term facilities in place for your financing needs. Typically your firm has not met the loan covenants and ratios established by the bank at the outset of the relationship.

The critical part of your Special loans journey involves any deadline set by the bank. Here it’s important to determine whether the bank exit strategy is ‘ immediate’ or if they will work with you on options that can ultimately save the relationship. The bank is of course interested in full recovery of any loans or credit facilities, so the critical question becomes: Can this relationship be saved or are other financing options available?!

We’ve used the word relationship a number of times – it’s important to mention that your old account mgr and branch will often be disappearing at this point as specialized ‘ workout ‘ managers are now handling your banking.

We’ve worked with many firms who are in Special Loans and spent numerous amounts of time in seeking other Canadian chartered bank facilities to replace the stress of their Special Loans scenario. We have rarely seen this strategy be successful, if ever, if only for the fact that we’re of the opinion that competitive banking is not achieved by buying someone else’s problems!
At this point never has it been more important to assess the assets and collateral your business has. We’ll mention also that the bank workout managers will typically ask you to be reporting more on key asset categories such as receivables, inventory, payables, etc. In certain cases if your business is of a certain size expensive audits and appraisals will be required by the bank, at your cost. This is a great time to determine what you feel your future financing course will be, if only to avoid these high fees.

At the heart of the bank workout is your determination as to whether you in fact need to move on to another method of financing your business. In some cases if it hasn’t been made perfectly clear your bank might be viewing your entire industry as ‘ out of favor ‘. Over the years industries such as auto, printing, etc have found themselves to be deemed ‘ high risk ‘.

Various options are in place for new financing for your firm. Most typically they include new ‘ NON BANK ASSET BASED LINES OF CREDIT ‘ from commercial lenders who are focusing on your assets and business prospects. In certain cases temporary asset bridge loans might make sense, providing an interim step to a new finance strategy.

If you’re looking for options and that ‘ getting out of jail free’ feeling via your current situation in a bank workout special loans scenario seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can provide options in the troubled situation of your bank breakup .

Author Stan Prokop7 Park Avenue Financial :
http://www.7parkavenuefinancial.comBusiness financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 – Completed in excess of 100 Million $ of financing for Canadian corporations . Info /Contact :


7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Office = 905 829 2653

‘ Canadian Business Financing With The Intelligent Use Of Experience ‘

Stan has over 40 years of business and finance executive experience. He has been recognized as a leading credit/financial executives for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.

7 Park Avenue Financial
Canadian Business Financing