Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: May 21, 2013

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There are several ways that business loan borrowers can reduce their payments if their business is struggling. Businesses have been intensely competing in the ongoing recovery, making business loan repayment a sometimes difficult feat.

In order to find out the best ways that borrowers can reduce their payments and to learn more about the difficulties faced after borrowing business loans, spoke with a commercial lending expert.

Richard Martens, owner of NW Advisory LLC and Vice President at US Bank, told that borrowers should try to stretch out amortization if they are having trouble with the business loans they borrowed.

He explained that this would extend the payment terms for several years, much like how a homeowner refinances their mortgage loan balance for another 30 years after having already paid for a period of time.

“Also, if the business owner has equity in real estate they may be able to use it as collateral to stretch repayment terms to 20 or more years from 5 of fewer that are available on other loan types,” said Martens. 

He told that lenders typically don’t provide much in the way of protection and assistance. Martens pointed out that lenders are in the business of making business loans and getting their money back on the terms that borrowers agree to.

As a result, lenders only act in their own self-interest and not necessarily in that of the borrower. He said that intermediaries, such as consultants and accountants, can often better argue on behalf of business loan borrowers to a bank that is unwilling to offer leniency on repayment.

Even though businesses facing difficulties should refinance, as Martens points out, sometimes it is too little and too late. If businesses fall behind on payments or begin to default, they may actually be unable to even be considered for a refinance. 

“This is particularly true as the business owner often is in denial for a period before recognizing that they are in trouble,” said Martens. “By then it is too late to refinance, at least on advantageous terms.” 

Martens cautioned that even though commentary about the difficulties of running a successful business are commonplace, filing for bankruptcy in the face of difficulty is a very expensive alternative to resolving cash flow and financial problems — even for business loan lenders.

Should a business be facing financial difficulties, Martens advises quick and decisive action.

“If you are struggling with repayment, develop a new (and written) plan that shows how you can repay,” said Martens. “It may be very helpful to retain an experienced workout professional to help develop and implement the plan.  Absent such a plan, any plea for assistance from the lender is likely to be ignored.”