If the bank is already moving, what can I do?

Because banks and other lenders have security, usually a fixed and floating charge and maybe a mortgage over land, buildings or equipment and maybe the director’s house or other assets, the banks are very strong.

If the company defaults on interest or principal the bank can exercise their security or foreclose on the property secured. They may foreclose, ask you to give them vacant possession or appoint a Receiver over their security. Again, be aware that they usually use that power reluctantly and carefully because they have to follow certain legal rules which mean you can negotiate and ensure the assets secured are sold properly.

There are a number of levels here. Banks and other lenders have about 30 trigger indicators to check before starting to worry. Those indicators include repayments, of course, but also whether you are up to date with super and tax payments. Your manager will note these and he is obliged to check why. If he is not persuaded that it is a glitch, he will need to be convinced it is temporary. If the problem comes up again, he reports you to the head office ‘hospital section’. That department will have a name like ‘Strategic Business Section’. If your matter can’t be returned to the manager within a few weeks then alarm bells start and it will be hard to continue the association.

The bank may tell you that they don’t want your business anymore.

The Global Financial Crisis and its extended after effects mean the banks are now very different. If they hold a fixed and floating charge over your business, it is a good idea to refinance as soon as possible and move to a new financier, where possible. There is also a strong possibility that the bank holds security over your house as well as your business. The best thing you can do is obtain a new form of finance. This is not an easy prospect, but lets sit down and discuss your options and find a strategy.

There are two things to do here – start preparing applications and opening preliminary discussions with multiple financiers. But just as importantly, start planning to put a plan B in place with a financial ‘floor’ for directors and principals. Things can go wrong quickly and you need to know there is a backup plan. There is no-one better to assist in this than Triple R.

Not only will we help with refinance, but also show you how to separate and protect your personal assets from the activities of your business.

It is important to analyse your business and determine the reasons behind the position with your current lender. We can create a new structure and strategy for the future of your business. We will develop a strategic solution that can get you back on track.

If the bank has moved beyond this point

For example, if the bank or lender is taking steps to appoint a Receiver, then all of the above still applies but you need to get us involved immediately. The bank may be persuade to look at a less expensive alternative. A Receiver will require that the bank indemnifies them for their fees – at $450 and hour or more and $150 for juniors it soon adds up. But you definitely need the experienced third party with you and behind you at this stage.

Your house on the line too?

It is no secret that the major banks only lend you their money once, but they make certain to secure themselves twice. They make sure of this by taking a security over your business and over your home. Whatever they have called their business product; in effect, it is a mortgage.

Rebuild Now can find you alternatives to having your house directly exposed to your business and provide the business solution as well.