18 Mar How to Survive an Economic Shutdown
How to Survive an Economic Shutdown
Don’t be an Ostrich! Now Isn’t the Time to Stick Your Head in the Sand.
This isn’t meant to be another message discussing COVID-19 medical issues, rather it is meant to discuss the business issues created by the pandemic. Specifically, unless you are in the business of selling medical supplies, groceries or toilet paper, you are probably seeing a major drop in your business volume or wages.
How are you approaching this unprecedented Economic Shutdown? We want to encourage you to reach out to your lenders, landlords and key suppliers TODAY if you will be experiencing a cash flow shortage.
One of our Partners has spoken with several lenders over the past few days. They have all indicated that while they don’t yet have a formal plan in place, they would find working with a customer much easier if that customer came to them prior to missing payments.
Similarly, while banks are aware that many of their customers will not make their loan covenants for the next 4 quarters, they would prefer and even expect you to come in now and seek a loan modification. Likewise, approach your landlord now if making your rent will be problematic. Work together to form modifications to your lease payments. Don’t miss your rent payments and then wait to see what happens.
Be proactive, it will be greatly appreciated by lenders, landlords, and suppliers. They all know what is happening, and they know it is due to forces outside your control. They will be much more willing to work with those who come to them now!
Here’s another example of how proactive communication can work to your benefit. Haynie & Company had a client with $500 million in real estate debt when the real estate crash occurred in late 2007. He immediately began meeting with each of his lenders on a weekly basis to update them, and he did this for over a year. Each lender expressed their appreciation to him and told him that he was their only borrower that came to see them.
In summary, we believe communication is key to survival right now. Lenders and landlords will be more likely to work with you if you are willing to voluntarily communicate with them. If you have any questions or would like to discuss this further please Contact Us.