Small Business Loans With Bad Credit

Laura asks…

The Bank Manager’s Dilemma?

Topic: Institutions and Markets (Loan Covenants)
Characters: Sara, A branch manager at a large commercial bank
As a young branch manager at a relatively small retail office within a large bank holding
company, Sara has been challenged by her superiors to increase loan and deposit volume
within her local banking market. In Sara’s first year on the job, she has designed and
implemented an aggressive calling program in which she visits local businesses and solicits
new corporate accounts for the bank. Her initial efforts have been most successful. In spite
of strong competition from other local financial institutions, Sara has managed to land a new
$2 million deposit account from a local apartment management firm, Silver Valley Estates,
and she is currently negotiating with Silver Valley’s president to provide a $300,000
mortgage loan for his new personal residence.
After a recent credit committee meeting at the bank’s regional headquarters where Sara
presented the mortgage loan request and received approval from the bank’s senior leaders for
this loan, Sara is called to her boss’s office. She can hardly contain her excitement in
greeting her boss, telling him of the new mortgage loan she is planning to make. Upon
hearing the news, Sara’s boss frowns and tells her of a mistake that occurred in the bank’s
deposit operations center several weeks ago.
It seems a group of checks worth $20,000 deposited into Silver Valley’s rental collection
account two months ago were returned to the bank for nonsufficient funds by the Federal
Reserve. Instead of promptly deducting the bad checks from Silver Valley’s account and
returning them to the firm, one of the deposit operations clerks at the bank inadvertently
placed the checks in his bottom desk drawer and forgot about them. After several weeks, the
bank’s auditors located the checks, and now Sara must debit Silver Valley’s account and
return the checks to the firm.
Sara protests to her boss that this action would clearly be wrong, because the bank’s written
policy states that checks accepted for deposit cannot be returned after the tenth business day
following their date of deposit. In addition, Sara explains that one condition of the bank’s
mortgage loan approval to Silver Valley’s president is that the firm must maintain a major
deposit account with Sara’s branch. She knows that if she charges the Silver Valley account
for the bad check loss, she will anger Silver Valley’s president, lose the $2 million deposit
account and the new mortgage loan, and sacrifice all future business from Silver Valley to
competing financial institutions in her local market.
Sara’s boss claims that he understands her dilemma, but he is adamant in his instruction to
her. The bank cannot afford a $20,000 loss to a new corporate depositor, and she must debit
Silver Valley’s account to cover the bad check loss. Moreover, Sara is quietly warned that
discussing this matter with any other senior officers of the bank will prove most damaging to
her career. What should she do?

admin answers:

She should continue business as usual.

Daniel asks…

I’ve been working with a Wells Fargo Bill Collection Lawyer, they won’t accept payment plans. (TX)?

I have been negociating with a lawyer representing Wells Fargo. I was never served papers but the judge signed off on the papers, it was ok according to the judge since they couldn’t find me. This all occurred during Hurricane Ike and they couldn’t find me due to property damage and honestly lack of trying (private server).

I used every bit of my emergency savings to get through that 3 months of no work & repairs. January (2009) I found out all this was going on and I had been *served.*. I asked for proof of debt, got it & that gave me a month. I owe about $5500 – my last offer was $1000 a month and my truck as collaterial (worth between 5 & 6K). They rejected that & only want a lump sum (same answer everytime). They want me to fill out an asset form, P&L, financial qustionaire & send them 2 years tax returns (I haven’t filled in 3 years, lack of funds for CPA). I just got the 3 years ago done. Then they *might* consider payments. Well they are going to find a lot of bad debt & One really good asset – my business property, paid in full. Or more than likely the lawyer did a search on the property tax web site and found that.

I have time & time again tried to get a loan since January – no dice. I have no equity in my home. I live in TX so my home can’t be taken, but I’m betting my shop can. It is my understanding that if this goes to court, they can force a Sheriff auction. I may be wrong. I haven’t hired a lawyer because I’m trying not to throw more money out of the window. The only person that considered loaning on the building needs me to pay up front – survey, inspections, & appraisal – I don’t have that & that would be just about what I owe!! At this point I doubt the WF lawyer will wait that long (up to 6 weeks).

Does anyone have any suggestions? I’m not about to fill out the financial statement without consulting a lawyer.

My thinking is to continue to attempt to work something out on my own and pay off the debt, rather than hiring a lawyer for ?1000? and still oweing the same amount…

ANY SUGGESTIONS, TIPS, etc. I’m at wits ends. And I’m sure they are fixing to take it to court. I know the Judge (small town) and she will force it to mediation? (this is what she usually does) & will be VERY upset if I don’t appear with a lawyer… And being a small town, everyone will know my business (all court records are printed in the paper).

One bit of background – the loan showed charged off on my credit report – I stupid & uneducated about that stuff – thought that meant it went away. I had a real hard time 4 years & have since managed to pay off everyone else, including 12K in medical bills. So my ignorance is coming back to bit me…

Thanks for your time, advice, etc..
I only owe the WF debt, 6K on my car and my home. I just don’t have cash at this point. IRS debt can’t be dealed away, but I usually pay more to the CPA than the IRS. I’m so close to catching up & can’t understand why they won’t.

Isn’t it to late to involve anyone but a lawyer at this point – it is logged in the court system.
As for the tax return – yikes I don’t understand it. I could do a simple return, but my returns end up being 1/2 inch or more thick. I’m fixing to return a 2005 one that was done for me recently. I’m able to do quarterly reports, but have no clue about depreciation, etc…. Is one able to find old tax software & attempt to do it?
My mailing address & home address are different. They went to the mailing address – which was mostly destroyed by Hurricane Ike, they never tried to serve at my home.

admin answers:

I’m sorry about your problems, but the bad news is, you need a lawyer. Not using a lawyer will not save you money. The settlement will get screwed up and done wrong and end up costing you more in the long run that the attorney would have charged. You haven’t been using a lawyer and things haven’t gotten better, have they.

As far as being served, you have a right to be served at your address. You have a legal obligation to notify your creditors of your current address. If they go to your official address and you aren’t there, then they have complied with the law. Far from being a defense, they can actually use this against you saying that you were hiding from them to avoid paying your bills. If you don’t keep addresses current, then you give up your right to legal notice.

I’m more concerned about your not filing taxes. Not filing taxes is a crime. Lack of money for a CPA is not an excuse because there is no law that requires that you use one. If you don’t have money for a CPA, your taxes can’t be that complicated. Turbo tax does a great job for $60, or you could do it by hand. You may even qualify for free online tax preparation. The value of a CPA is in planning your business for the future. A CPA can’t do anything for you after the year is over except type your numbers into his tax software which isn’t much different than Turbo Tax. Besides, filing incorrectly is still filing and avoids the penalty for not filing. You can’t be sent to jail for an error; you can be sent to jail for not filing. Contact the IRS immediately before they catch up and this blows up into a much bigger problem than the Wells Fargo bill.

Lizzie asks…

Why can’t libs see these are the BEST of times? I can’t believe how much money I made since 2004?

I had some money saved for my college, but I decided I wouldn’t go. My parents had saved about $20,000.
I found a small used car lot for sale. They had a little hut, with two desks and a toilet in a closet. The lot was big enough for about 20 cars, they had three junk cars left at the time.
I took over the $750 a month lease and they were glad to be out of the business. There was nearly a year left on the lease. These guys had no computer. They were very old school.
I purchased about 10 cars, pick-ups, vans and SUV’s at auction. I put about 10% down and found an investor to cover the rest.
I sold a couple really fast and paid the loan back on everything. I went to another auction. I purchased 2-3 vehicles from distressed buyers for next to nothing.
Before I knew it, the lot was full. The cars were on eBay and I was selling 10 cars a week, making about $7,500 a week.
I love my customers. Bad credit. 18% interest. Sell for 20% over NADA. Buy for 20% under NADA. Life couldn’t be better!

admin answers:

Used cars? LOL sweet, you’ll be rolling in Miller High Life for the rest of your life.

Maybe you can get back the 400,000 jobs we’ve lost here in California while you’re at it, and rebuild the Detroit auto industry and all the thousands of small businesses it supported, too.
Perhaps you have a plan to get back the billions in taxes those businesses generated for the state, local, and federal government as well?
Used cars. Ha.

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