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All about Special Assets

Now more than ever we are seeing applicants who have been transferred to the “special assets department’ of their bank.

Please be cautioned, “Special Assets” is NOT “special” in a good way!!!


The first communication will generally sound like “the bank no longer wants your business.  Please pay us off a soon as possible.”


The entrepreneur’s natural reaction is surprise and disbelief.  After all, for years, bankers have been courting him; tell him they want his ‘relationship’.  And, after all, he chose to go with this bank.  How dare they jilt him this way?


Not only is it emotionally debilitating, but it may have serious ramifications for the company.


We are seeing not only operating companies but also real estate investment (residential and commercial) loans being transferred into special assets, and very few transfers arise from a payment default:


Common scenarios that we see will cause a transfer include:


  • Reassessment of real estate value that lowers loan to value below policy levels
  • Breach of Financial Covenants
  • Losses for previous fiscal year
  • Negative equity in the operating company
  • Industry out of favor
  • Non-renewal of a matured loan.


What the business owner must understand, and the sooner the better, is to take this turn of events seriously!


If your loan is with a big bank, the special assets officer can be characterized like a Roman lion, hungry for fresh meat (and you’re it).  They have been honing their skills of how to get rid of you as fast as possible and they are very good at it.  They haven’t had a lot to do the past few years, so they’re really anxious to apply their talents on you.

 Special Assets OfficerPortrait of “Big Bank Special Assets Officer”


If you are with a small bank, your banker is likely fatigued and shell shocked, as they have more problem loans than they ever have had to deal with before, and they are under intense scrutiny from State and Federal Banking authorities.


Special Assets Officer Portrait of your “Community Banker”


If your bank is taken over by the FDIC, and your loan will likely be sold on the secondary market, and you will have little or no communication during the process….and then well…who knows, but its never good!


Sadly, this need to refinance generally comes when the business is least likely to be attractive to another conventional lender aka bank.  This is where Corporate Funding can help.  We have lenders that we utilize to refinance bank loans that don’t have the same credit requirements.


We have been successful in finding replacement financing for many of the special asset “exit” opportunities presented to us.  Not always can we come to the table with 100% financing or even new financing, which an entrepreneur may need to effect a turnaround of his business.


But in all cases the ....facts matter.  We won’t take on a project until we understand the facts and believe the project can be successfully completed.


Contact us today if you have been assigned to “special assets”…the sooner the better, and let us try to resolve it in your favor….not the lenders.