Do Not Abandon Your Bank Loans Even In Recession — Anayo Nwosu

I feel for many borrowing customers of banks at this time. No other time is worse than now in our recent economic history.

You need to read this piece carefully if you have borrowed from a bank and could no longer service your loans due to one or all of the following:

1. Poor sales
2. Inability to replenish stock due to FX
     scarcity
3. Inability to source raw materials used for
     your production
4. Flooding of your market by cheaper
     alternatives;

You now avoid meeting with your bankers following your inability to meet previous repayment commitments; you have also started developing a thick skin and are prepared to damn the consequences.

Don't do a long term injury to yourself by doing nothing. Even the bankers know that it's not a criminal act to owe and to become incapable of repaying.

If you abandon your account, your loan will become sticky or bad. If this happens, the bank will submit your details to bad loans black book maintained by CBN approved credit bureaux.

Nobody, whose company or name has a negative check result will ever secure loan again in a Nigerian bank until the loans are reported paid or performing.

Some embassies in Nigeria and would-be business partners abroad now rely on credit bureaux for the first line of character or reputation check.

To avoid reputational baggage, set up a meeting with the Risk Management department of your bank to discuss your challenges with them.

Go to the meeting with a good lawyer and a sound accountant who understand your situation.

Tell the bank that you are willing to repay the loan and request the following:

1. Restructure of the outstanding debt to a long term loan.

2. Ask for deferred payment of interest for three months and principal for up to 2 years. The could stretch new tenor to 10 years.

3. The accountant would have analyzed your situation and determined what repayment structure you need based on your realistic cash flows.

4. Be bold to ask for more loan or an enhancement of the existing facility if that is what you need to enable you trade out your loan or generate greater cash flows for loan service.

5. Be ready to work with the bank to sell the collateral you pledged for the loans. More money is usually realized when the owner is involved in the sales.

Your willingness to resolve the loan issue is the only advertisement of character bankers need for future business with you.

Beside the known material downside of bad loans, there is the spiritual side.

Every debtor must know that "debt" is another synonym for "sin" and as such, no chronic debtor or sinner shall make heaven or see God.

Reconcile with your creditor or bankers early enough as nobody knows the time or hour the trumpet will sound.

Act now before it becomes too late.