Exactly what is a Loan Default?...
and how bad is it?
How a loan default can be the beginning
of the end for your business.
In this article, we'll help you understand what a loan default
technically is, exactly the process, and road to default,
and how it affects your next 10 years.
The beginning road
When finances get tight, something has got to give. There's
no more money, no more credit, no options but to not pay
something. Obviously our natural human priorities lay out
in this order.
Pay for in order:
1. Food
2. Water bill
3. Electricity
4. Rent/Mortgage
5. Nat Gas
6. Car Gas
7. Personal grooming items, like tooth paste, deodorant, etc.
8. Clothes/shoes you absolutely need now.
9. Car payment
10. Car insurance.
After these, credit bills are next. Credit cards are usually the first to suffer, and should be if you have a business loan or loans...because they affect your ability to borrow large amounts quickly to keep your business making income,
by inventory purchase, payroll, etc.
After you miss a payment, and you know you will miss the next one, call your lender and try to negotiate a loan mod.
Some lenders will be grateful and happily comply.
Some won't. It's as simple as that.
Upon your 3rd missed payment, unless you call that moment
and let them ACH out newly deposited money, it goes to
default. The lender files a UCC lien, and you are now paying
default fees of $2,500 per loan--to ever pay it off.
The default goes on your SSN record for 10 years, you can not
erase it by changing your EIN, nor business name,
nor address. We see this sneaky yet fruitless tactic all the time.
Once you default:
- 99% of all business lenders will decline you.
-You are banned from obtaining SBA loans for 10 years.
-You are considered worse than having a Bankruptcy, as you
can't file that again for 10 years.
-93% of all businesses that default on a business loan will be
out of business very soon.
The only good news
The only good news about a default is that A1 Financial USA
is in that 1% of lenders that can fund you. We must warn you the rate will be high, the term will be low. Don't even think
you can negotiate that to your favor. Getting an offer after
a default is a favor made to you, not the other way around.
The 1% of lenders are just playing the numbers, taking a huge
risk. They earn the high rate for the risk. Sometimes, however,
we can offer a "Tranche Build" loan, where you start out small,
and after half paid off, we can ratchet up more money to you.
Yes, A1 Financial USA funds defaults...but if you pay off the old
default first, you triple your chances of receiving quite a bit better offer than if you do not. We know bad things happen
to good people, Covid was a lot of bad happening to a lot of
good payers. We take that into account. We're always willing
to help when there is a need, if possible.
Past default? Apply today here.
Afterwards>Email us the details of the default.
Always be honest about it. We value honesty highly.