| Seasonal commercial loans can be a common source | | | | the best idea to keep the lender up to date on any |
| of funding for a business. However these types of | | | | changes, which may affect repayment of the loan so |
| loan are sometimes filled with risks and riddled with | | | | that they may look for alternative solutions. |
| problems. If the loans are not used for the intended | | | | When seasonal commercial loans are structured in a |
| reason or paid when agreed upon the loans then | | | | way that cannot be completely cleaned up with sale |
| become a liability for the lender. | | | | of trade the company often finds difficulty repaying |
| Whenever possible the lender should always check to | | | | the loan. This can happen when the loan is made for |
| insure the trade was fulfilled as agreed. Sometimes | | | | more than the amount of trade therefore making it |
| the lender may be able to catch potential problems | | | | difficult for the business to cover the loan with |
| before they become real troubles. Companies are the | | | | seasonal trade. When there is also lack of collateral or |
| same as an individual in that they are responsible for | | | | equity in day to day operations the business may |
| fulfilling the terms of all loan agreements and | | | | find repayment nearly impossible. This can cause a |
| promissory notes. | | | | spiral of the companies problems financially due to |
| If the end of the term has come and went without | | | | overextending their assets. If there is too much loan |
| repayment on the loan the bank often will check to | | | | for the amount of product it is clearly a bad idea for |
| find out whether the trade was fully paid or not. The | | | | the lender to disperse the loan without additional |
| problem will only be further when the trade is not | | | | collateral. |
| paid as well thus dropping the company into a danger | | | | Whenever possible the lender should try and be |
| zone making repayment even more difficult than | | | | involved or at least aware of the marketing plan for |
| previously. | | | | the business. This will help the lender to spot |
| Sometime incidents can occur which are beyond the | | | | common problems before they may otherwise |
| companies control causing them to be unable to | | | | become apparent due to lending experience and |
| complete the repayment. In that case there are | | | | common mistakes. When the lender and the business |
| remedies available between the lender and the | | | | work together for all aspects of the lending process |
| business but generally only when the lender is | | | | including sharing marketing plans and fiscal reports |
| contacted at first sign of difficulty. Waiting too long | | | | both parties will be more likely to insure success of |
| may cause the problem to grow worse and cause | | | | repayment of the seasonal commercial loan. |
| the lender to lose faith in the borrower. It is always | | | | |