How to Work with Your Banker When Loan Default Looms

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Mark T. Jensen, co-founder of Bowie & Jensen and head of the firm’s transaction department, gives tips for businesses struggling with loans

Mark T. Jensen, Bowie & Jensen

Mr. Jensen is a co-founder of Bowie & Jensen and leads the firm’s transactional department. He has received numerous legal awards and most recently was named to SmartCEO’s legal elite.

As chairman of the firm’s transactional department, Mr. Jensen focuses his practice on the representation of small businesses, privately held companies of all sizes, entrepreneurs and professionals, drawing on his personal experience and professional training to identify goals and develop strategies and tactics to achieve them.

Mr. Jensen is committed to public service and serves on the Board of Directors of the MedStar Health System. MedStar Health is a $3.8 billion not-for-profit, regional healthcare system with a network of nine hospitals and 20 other health-related businesses across Maryland and the Washington, D.C., region.

Mr. Jensen says in these difficult times we all know someone who has been faced with defaulting on a business loan. Instincts often prompt us to have angry responses, or denial and avoidance. Based on Mr. Jensen’s experience representing borrowers and lenders for over 24 years he offers these tips for businesses facing default.

1. Be proactive. You can usually see a default coming before it hits. Don’t wait until you miss a payment to involve your lender. When you determine that default is likely, contact your banker about the situation. Nobody likes surprises, especially lenders who are owed money.

2. Be transparent and honest. If you have a problem, be honest with your lender about how you got into trouble and what your plans are for resolving the situation. Share as much information as possible and do it honestly. Do not play hide the ball or make the lender work for the information. To persuade the lender to take only the action necessary to collect money, and to avoid actions that will cause you pain and loss with no gain to the lender, you have to establish trust.

3. Be in touch. Give the lender regular, factual, meaningful updates. Do not make the lender chase you. Do what you promise, within the time promised.

4. Be realistic. Do not promise the lender dollars or timing that you cannot be certain to satisfy. Bad news delivered timely and openly is much better than good news that turns out to be untrue. Manage expectations.

5. Be rational. Do not be too emotional. Although it is intensely personal to you, it is business to your lender. And your contact at the lender is almost certainly someone who lacks the authority to forgive your debt. They have a job they want to keep and they are not picking on you personally. If you become too emotional you undermine the credibility of your arguments.

These simple and common sense guidelines can help make a difficult situation better. When the dust has settled and the lender has to decide how hard to push to collect a deficiency, or whether to sell your house even though there may not be enough equity to generate sufficient cash, the lender will consider how you have acted in relation to these guidelines. Being honest and nice really does help Mr. Jensen says.

About Bowie & Jensen
Bowie & Jensen is a Maryland-based law firm with attorneys representing clients around the world. Bowie & Jensen focuses on Business Litigation, Business Transactions, Intellectual Property, Employment Law, Estates & Trusts, Tax and Construction Law. For more information on Bowie & Jensen, please visit http://www.bowie-jensen.com.

MEDIA CONTACT:
Karen McGagh, KMC
Karen(at)karenmcgagh(dot)com
+443-632-4217

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