The economic repercussions of the pandemic have pushed many American firms into debt. Repaying the debt in these circumstances can be challenging.  It’s estimated that one in ten US firms may default on their debt. These alarming numbers aren’t good signs. However, there’s a way out of a default debt situation known as a workout loan.

Here’s everything you need to know about it.

The Three Stages Of Loan Repayment

The interaction between a money lender and a borrower generally occurs in three stages:

Stage 1: Are Things Alright?

As the debt repayment deadline approaches, a lender would naturally inquire about the repayment status. You’ll have to provide your financial details, and the private money lender may assess your firm’s situation with it.

Stage2: The Negotiation

If you think you won’t be able to repay the loan on time, you should call for negotiations. The negotiation can lead to the restructuring of the repayment details. You can ask for interest rate reduction by providing additional collateral, or if you think that a foreclosure is inevitable, you can opt for a workout loan.

Stage3: Financial Default

Neglecting a workout loan can lead to a default situation. When your company can’t repay the loan, the lender is legally liable to own the commercial property you submitted as financial security. The lender will sell the property and use the funds to balance the loan.

Basics Of A Workout Loan

A workout loan is a way to restructure your debt and get out of a foreclosure situation by changing the debt repayment requirements. A private money lender can assist you in modifying the loan agreement to make the repayment smoother. In a loan workout, you can modify many terms, including total repayment amount, interest rate, loan maturity date. It’s sensible to hire a reputed private money lender who can advise on your loan workout. The moneylender would assess your situation and gain insight into why you couldn’t repay the loan in the first place.

Workout Loans Available In Atlanta, GA

If you’re looking for a way out from a foreclosure situation, head over to Commercial Private Equity today. We provide workout loans that can help you restructure your debt and effectively help you get out of default loan situations. We’ve been working in the private money lending industry for over seventy-five years. We’ve introduced several levels of loan programs and offer specialized hard money loans, including commercial hard money loans, bridge loans, construction loans, and raw land loans.

You can reach out to us here for more information.