Introduction

It’s a new world out there…
“Do what you can, with what you have,
where you are.”

-Theodore Roosevelt

Following the tumultuous financial downturn of 2008 and the dramatic decrease in milk prices that occurred in 2009, I find it ironic that some lenders, many of whom were bailed out by the Federal government during this same time period, have walked away from their borrowers. This, of course, is occurring at a time when these same borrowers needed them most.

Some of my colleagues and many loan officers have informed me that this is now the “New Normal” and that I should now lower my expectations. However, I do not believe that people rise to low expectations. On the contrary, as new competitors enter the market (and they will), existing lenders will either step up their efforts to retain their share of market or they will exit the lending scene. I consider either of these paths a form of progress, primarily because I see no point in a lender “acting” as if they will provide loans to businesses when, in fact, they have no intention whatsoever of doing so…

The following cases are real life examples of banking experiences that Clients of mine have experienced in the past several years. Hopefully, you will be able to take away positive lessons from these and the after-thoughts to these stories. In some cases, you may actually find some humor in the ludicrous events that have occurred during this same time period. In all cases, however, my intent is not to degrade nor criticize any lender, but rather to provide you with examples of events that have actually been happening so that you may learn something positive from it. If you are a Loan Officer, perhaps you, too, will be able to benefit from these examples.

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Chapter 2

Recognizing the Value of Persistence
“Never, Never, Never Give Up”

-Winston Churchill

In this first case, my Client was encouraged to pursue a new real estate loan with their lender. For six months, we worked on cash flow projections and had them reviewed by the bank before finally being turned down by the bank in October 2008. Their special assets division took over this lending relationship as a result of increased feed costs experienced in 2008 and reduced profitability in 2009. Imagine that…

Monthly inventories were now to be completed on a monthly basis, in spite of this client never having been out of compliance on their loan to value or any other loan covenants. We’ve since gone on to make steady improvement in both loan to value and cash flow the past two years, in spite of the decreases in milk prices in 2009.
Simultaneously, we have been able to reduce the Client’s accounts payable from a level of $650,000 to $225,000 recently, even as we experienced milk prices that ranged from $9.50-$14.50/cwt range.