Received A Dear John Letter From The Bank . In Special Loans ? Here’s our solution. Order Takeout!

OVERVIEW – Information on alternative financing procurement when a bank demand letter for business loans or credit lines is received

Is a demand letter en route from your bank in Canada? Perhaps you have already received it. It’s what we could call a very unwanted ‘ DEAR JOHN ‘ letter, and it’s time for Alternative financing procurement for your business survival.

In effect you need to ‘ take out the bank ‘ via their current secured lending arrangement with you. It’s our version of ordering takeout! Let’s dig in.

When we talk to clients who are formally or informally out of their favor the challenge for the business owner and financial manager is to secure alternative finance solutions for business lines of credit, term loans, and asset monetization and acquisition.

Key to this whole exercise is understood how your firm got here in the first place. Although it’s a simple fact of ‘ not paying on time’, in other instances it’s a breach of loan covenants or ratios, or perhaps it’s the banks view that collateral supplied for your financing, either personal or corporate, no longer has value.

The security your firm has provided, and the collateralization paperwork around it ( General security agreements / asset registrations, etc ) obviously gives the bank the right to enforce their actions. If all parties were in agreement assets would be sold or monetized in favor of the bank.

This would include, as per the categories we have noted:

Real estate – if applicable
Equipment / Fixed assets
Accounts receivable

However, that’s generally not desired by the business owner!

What then are the alternatives to banK demand letters when your loan has been called and you are in the bank category of ‘ underperforming special loans’. One of them is alternative financing procurement via Asset based lending. And typically they are found via NON BANK ASSET LENDERS who specialize in just this form of financing. They are the solution when it comes to your ability to save jobs for employees, keep your business assets, and in fact resurrect and grow your business.

Almost all businesses of any significance these days are of course incorporated. If a business is not legally incorporated it’s in effect a personal consumer situation which is an entirely different kettle of fish.

Refinancing your company via an alternative non bank lender allows you to maintain credit lines, acquire more assets if needed, and keeps cash flow flowing.

Generally speaking in our experience it is highly unlikely that another bank will provide the financing you need when you are in foreclosure proceedings with your current bank. Our logic is simple; people don’t typically like to purchase other peoples problems. So starting fresh with new business relationships and financing is often the key to success. Naturally if you can anticipate loan default and correct that scenario that is the optimal, however less typical, solution.

We would also add from our experience that many firms are able to stay in the bank SPECIAL LOANS category and find they being allowed to go back to traditional arrangements with that same bank. However because relationships and promises have somewhat broken down that is absolutely a much more rare case.

Asset based loans, sale leasebacks, bridge loans are solid ways to fix the bank takeout. If your company has received, or thinks it will receive the DEAR JOHN demand letter seek out and speak to a trusted, credible and experienced Canadian business financing advisor
for practical advice and takeout strategies. Takeout will have never tasted so good.

Author: Stan Prokop – founder of 7 Park Avenue Financial

Originating business financing for Canadian companies, specializing in working capital, cash flow, and asset based financing. In business 10 years – has completed in excess of 90 Million $$ of financing for Canadian corporations. Core competencies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details:


Greg LaBella
7 Park Avenue Financial
Phone = 905 302 4171
Email =

7 Park Avenue Financial
Canadian Business Financing