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
