Because lenders know borrowers are usually in a vulnerable position during workout negotiations, they may try to extract unwarranted concessions. A lender, for example, may insist that any new loan documents include an arbitration clause that waives the company's right to a jury trial, or a release by the borrower of any lender liability or other claims against the lender. Each loan workout is different. A small business may need an entire set of new loan documents or, if the changes are minor, amendments to existing loan agreements may suffice. The business owner should be prepared to pay renewal or rollover fees to the lender for changes in the loan terms.
Some lenders require borrowers to pay the lender's attorney's fees incurred during the workout.
Often, the written documents of a workout are just as comprehensive as the original loan documents. Business owners must make sure that all of the lender's oral promises or commitments made during the negotiations are documented in writing in the loan papers. Without written documentation, these oral promises may be worthless when the business owner later tries to hold the lender to them. Not all workout discussions are successful. If negotiations fail but clear lender misconduct is present, the borrower and its legal counsel must determine whether it is worth the time and money to fight the lender in court.