Blueprint for Success

Living With SAM

Remember, your primary focus from the day you enter Special Loans Management is to get out. In order to do that, you will need to survive the first 90 days. Here’s how to do it:

1. Accept reasonable terms, even if it means putting a mortgage on Aunt Bea’s cottage. You are buying time.
2. Insist on a Standstill Agreement for as long as you can arrange. A stand-still will ensure that the Bank does not take further action so long as you live up to your part of the arrangement. Of course, if you can’t tolerate the arrangement, then do not sign a standstill.
3. While under an agreement such as a Standstill and Forbearance Agreement, religiously comply to the terms. Make payments exactly when due, provide reports on or before the due date and stay within arrangements such as margins.
4. Design and implement an exit strategy that you work diligently at until you have extricated yourself from this position. If you are able to negotiate a position with your Bank at which they will pledge (in writing) to return you to regular status, then work towards that position. Frankly, I don’t think that ever happens satisfactorily and my opinion is that "once a special loan, always a special loan" is most bankers opinion. In other words, you will always be tainted goods in the eyes of the bank’s credit people and on your first mis-step you will be returned to SAMmy.

   I believe your strategy should immediately focus you on escaping to other institutions. Remember, this may not be easy, since you already seem to be facing some difficulties, so don’t expect another bank to faint dead away when given the opportunity to acquire your business. I often recommend splitting the financing between term lenders, mortgage lenders (if you have that need) and operating lenders. In the latter case, there may be a temporary one to two year need to consider a factor or other asset based lender until the company restores its operations and balance sheet to a point where it can attract a mainstream lender. There is no shame in that, and the cost of doing business this way is probably far less than trying to operate under the restrictions imposed by SAM.

Conclusion