Discuss your coronavirus challenges and build trust. The following steps can help you as a small business owner to establish a collaborative relationship with your lender:

It is important to prepare projections that demonstrate how you anticipate your business will perform during the three to six months after your business re-opens. However, before approaching your lender go back through your business plan and think about what you would look for if you were the one lending money, by focusing on issues concerning the value of your collateral and your relationship with your lender. Revising your business plan will also give your lender confidence in your ability to meet your obligations and weather the storm.

With respect to any outstanding loans you may have, it’s important to locate and review your loan documents (a mortgage, loan agreement, security agreement, etc.) to understand: (i) What rights you have; (ii) Whether you, as a business owner, could be personally responsible for the obligations of your business; (iii) Whether your business has violated any provisions of the loan agreement; and (iv) What happens if your business cannot make payments in a timely manner.

Consult with an insolvency professional. Before you engage in discussions with your lender, (as discussed below), it is a good idea to engage insolvency professionals, such as an attorney or financial advisor, to review your business plan and loan agreements. They can also help you value your assets —even if it means talking to an appraiser— and give you advice as to what options you have. In addition, engaging a financial advisor or attorney will show your lender that you are committed and are proactive in trying to solve any issues your business may have.

After reviewing your loan documents and preparing projections, you should have an open discussion with your lender about your financial situation. Discussing your business plan and financial situation early on will give your lender confidence in your ability to pay going forward and avoid an adversarial situation. In addition, if you have defaulted or breached your loan agreements....

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