It’s one thing to read about other companies facing tough financial times. It’s quite another to experience the pressure yourself. The fact is, however, that many companies are having trouble paying their debts. And small business owners are called daily by lenders who want to collect.

Here are some recommendations for talking and negotiating with loan officers:

Face Reality

First, show your banker that you understand the problems. It’s important to do this quickly. If your idea of the problem isn’t convincing, things can fast go downhill. It is a strong possibility that the banker will push to liquidate your business assets.

Come Up With a Plan

Show that you know what to do, and do it. You should have a cash flow plan that demonstrates how you’ll cover your debt. To gain credibility for these projections, find information from trade journals and other independent sources. Talk to Filler & Associates for information on matters like projections and cash flow.

Narrow the Lender’s Options.

Sometimes a lender will suggest that a simple way to fix the problem is to bring in a new bank or new investor. This may sound good, but in tough economic climate it may not be possible. Many banks are writing new loans to small businesses with problems. Finding investors is also difficult. That leaves the bank two options: liquidation or staying with you until business rebounds. You need to convince the bank that the latter is the best option. Do your research and find real examples of liquidation values and how inventory and accounts receivable values plunge when a business closes. It might take some work, but you should be able to find out what happened to other companies in your industry.

Make an Offer

In exchange for going along with you, give the bank something it doesn’t have yet. Assuming you’ve already provided personal guarantees, agree to pay higher interest rates or shorten the loan maturity with a balloon payment. In this way, you’ll be buying time.

By following these tips, your lender will most likely step back and you’ll be able to breathe a little easier. Once your business is back on track, talk to your banker about setting up an emergency line of credit. Getting a loan when your small business is already in trouble will probably be much more costly than setting up financing ahead of time. Schedule a meeting with Filler & Associates to discuss more details.