Workout commercial loans: A means to restructuring a distressed commercial loan

The past year has been a tough one for the commercial sector, with the number of distressed commercial loans on he rise. Banks and financial institutions which are looking to minimize their losses are offering workout commercial loan deals to prevent loan owners from defaulting. As part of such a deal, the terms of the loan are restructured so that the borrower can avoid foreclosure or bankruptcy and the lender gets a chance to recover a distressed commercial loan. The conditions for the workout commercial loan may include a lower interest rate, elongating the loan period and other special payment agreements as agreed mutually by the lender and the borrower. Commercial loan workouts are hence considered beneficial for both parties involved. Distressed commercial loan advisory service providers or special servicers can help borrower negotiate the terms of the deal.

If you are looking for a workout commercial loan, it would help to know the process. The following are some general steps which are followed in a commercial loan workout:

Consultation

The first step consists of getting a professional consultation with regards to your situation. There are a lot of professionals for distressed commercial loan advisory services whom you can approach for such a consultation. Some special servicers may also provide you with a free consultation before you hire them. You need to have details related to your loan, property etc. ready so that the professional can undertake an evaluation and determine if you are eligible for a workout commercial loan.

Documentation

The documentation for the workout commercial loan is an important aspect, which needs to be handled with care. The way the paperwork is presented and the details which are provided to the lender help in putting your case forward, so you need to gather all important documents. The company providing distressed commercial loan advisory service can give you a checklist of documents to be submitted. Documents required generally consist of details of the loan, its conditions, property information (if any), personal financial details etc.

Submission of Documents

The workout commercial loan process can start once you submit the documents to the lender. It is important to submit the paperwork to the right person, or you risk having your file stuck for weeks and the process not moving forward. Your distressed commercial loan advisory service provider can assist you in finding the right person at the lender’s end, to whom you can submit your papers.

Negotiation

The final step in the process is that of negotiations between you and the lender. Your distressed commercial loan advisory service provider plays a key role in the negotiations, constantly making counter offers and arguments for getting you a favorable workout commercial loan deal. You can have a meeting with your distressed commercial loan advisory service provider before the negotiations begin so that you can clarify your goals and terms and conditions for the commercial loan workout.

The process for a workout commercial loan is a long one, with a lot of complications. Don’t worry if your distressed commercial loan advisory service provider takes some time in the negotiations; the process will continue until you and the lender can agree on the conditions of the commercial loan workout.