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How Far Will the Bank Go if You Are Short of Money

As long as you have been with a bank for a couple of years and have given the bank some advance warning regarding a few upcoming late payments, it will probably still want to keep your business. If you can present a good case for your company's future, it may even extend your credit limit in order to assist you during your time of financial trouble.

However, if you are going to be missing a lot of payments and can't predict when you be able to catch up, the bank will not be interested in extending your credit limit, no matter how much you may need the cash. On the other hand, if a bank feels it has a reasonable chance of recouping all or a significant portion of its loan at some point in the future, it probably won't attempt to foreclose on your assets.

Even though a bank may have carefully considered the existence of solid collateral such as real estate or equipment in lending you money, very few banks are eager to press a customer into foreclosure to offset loan losses. Banks seldom realize market value when they auction off foreclosed property or equipment. Foreclosure proceedings cost time, money, and community goodwill.

Always keep your bank apprised of any major financial changes in your company even when they are negative. And, in this case, offer it a realistic plan detailing its eventual payment in full.

By Source Streetwise Small Business Start-Up

 

 
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