Business Debt Refinance or Business foreclosure.
Business refinance can entrap the borrower into business foreclosure.
In Chapter 17 of the Code of banking practice the banks undertake to:
“If we are considering providing you with a new loan, or an increase in a loan limit, we will exercise the care and skill of a diligent and prudent banker.”
“If you are a small business, when assessing whether you can repay the loan we sill do so by considering the appropriate circumstances reasonably known to us.”
These clauses are widely believed to mean that the bank will use that care and skill to avoid lending business owners into unaffordable debt. Refinance can entrap the business into foreclosure.
Who gains from refinancing business debt?
That however is not said or suggested in the code. The most profitable loan for a banker is one that the borrower cannot afford repay or service but is secured by real property of far greater value than the loan it secures. Business, affected by weather, commodity prices and government policy are ideal targets. Comparatively, financial statements, loan projections and budgets may be lower on skills or priorities.
Business foreclosure.
When the business cannot make a repayment instalment the interest rate often increases. The debt builds up and the loan payments are first allocated to interest. The bank earns an increasing share of the business income each year. After many years the debt may have risen by millions and is approaching the value of the security, The bank will foreclose the business and sell its assets to get its money back. The business owner will lose all the money they have poured into the loan over the years. Thereby causing them to lose the business assets with which the loan was secured.
Refinancing business debt or Smoke and mirrors.
The bank did use its care and skill as a prudent banker. It protected itself all the time, making sure it had good mortgage security and could recover the debt in full by selling up the business assets and its security. For the bank and its shareholders it was very prudent. It just made the bank part of a small fortune. AI probably probably approved the business finance. But it took the business for a very expensive ride.
The Big Bad Billionaire Banks
It is to protect businesses that
GBAC has worked hard over the last 40 years. It helps business owners to see the traps in the bank offers of refinance. Thereby assisting businesses to protect themselves from predatory banks and receivers that prey on business foreclosures.
HI – Human Intelligence wins the day
It is possible for borrowers to obtain good, suitable and reasonably safe business loans. But it requires a good bit of work. The bank will exercise the care and skills of a diligent banker to earn itself the maximum amount from the business loan. It is important to understand that what the bank earns the business loses.
GBAC offers a HI (Human Intelligence) service. This includes negotiating the best loan first up, managing and clearing the business debt. Finally recovering the business assets at the end. That is the way for businesses to make money out of borrowing.
