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  • Working with Borrower to implement a forbearance which led to loan refinancing

    Lender’s Needs and concerns
    Lender had a $1.5 million loan to an owner operated greenhouse with another $2.0 million loan to the owner-occupied real estate holding company. The company was rich in assets but poor in cash flow. Lender had been providing the borrower with a $500 thousand seasonal working capital and was concerned about being caught if the borrower experienced a bad season or natural disaster because insurance coverage for greenhouses was not available.

    Borrower’s Needs and Concerns
    Borrower needed time to locate an alternate lender or a local bank that would be more understanding of its business model and willing to provide borrower with new loans for its seasonal working capital needs.  Borrower also needed a lender that was more willing to lend on farm land as opposed to relying too heavily on greenhouse inventory.

    Outcome and Results
    A principal of BSD, working for his former employer, structured and provided the borrower with 6 months of forbearance which included financial incentives to obtain refinancing. Alternative lenders were recommended for the Borrower. In the interim, the Borrowers seasonal line of credit was renewed to avoid business interruption while the Borrower was seeking a refinancing source.  Prior to the expiration of the forbearance period, the Borrower obtained and closed on a refinancing with a local credit union which repaid the existing lender in full and provided the borrower with a restructured term loan and permanent working capital for its greenhouse operation.

    Lesson Learned – All workout loans are not bad loans.  Sometimes, it is a matter of finding a lender that understands the risk and is willing to take it at appropriate compensation.   This was a win-win for both borrower and prior lender.  BSD Advisors maintain contacts with purchasers of distressed loans and can facilitate negotiations between borrowers, lenders, and distressed loan buyers.  BSD can assist borrowers to produce information that distressed loan purchasers need in order to assess the purchase price of these loans.  As always, these transactions take time.  BSD also assists borrowers with securing a forbearance period to facilitate continued operation of the business while the borrower is seeking refinancing.  Please contact a consultant from BSD Advisors if you find yourself in a similar situation.