One sixth of all construction loans are headed for default…call us quickly, we have a plan.

Reports recently filed by banks with the Federal Deposit Insurance Corporation indicate that at the end of June about one-sixth of all construction loans were in trouble. With more than half a trillion dollars in such loans outstanding, that represents a source of major losses for banks and a huge problem for borrowers.

Construction loans were highly attractive in recent years for many banks, particularly smaller ones without a national presence. One reason was that other types of loans were not easy to make, thus they became great loans for local smaller banks, banks typically less able to support and successfully absorb major losses.

The real issue from our perspective is the workout potential for the borrowers. Working out smaller local bank loans is frequently more challenging than working out larger national bank loans as each loss is more damaging with small banks as their capital position is obviously less than with larger banks. Thus, they tend to be more difficult to work out as successfully.

However, our results have been equally stunning, be the bank large or small. The major issue is the borrowers enter into workout discussions way too late and without adequate experienced representation. Their capital is exhausted and thus their options are limited.

If real estate is involved, such loans require far more to work out than other types of business loans. The bottom line is to call us as soon as you recognize the symptoms requiring a workout strategy.

The sooner we get involved, the better the results will be. Call 413-584-2481; Norm will arrange a teleconference for us to discuss your options.