Q: I've operated a successful business out of my home for the past 10 years. I recently asked my lender to release some of the collateral the bank holds for my business line of credit, but he insists on maintaining a second mortgage on my home as well as holding all my business assets as security. I think my business is strong enough to stand on its own. How can I convince my lender I'm right?
A: I think you just hit the nail on the head. If you're right, he's wrong, and when lenders are wrong, they typically lose money. You need to prove that the risk associated with releasing your home is minimal. Put together a package of information highlighting your company's financial performance. This information should be accompanied by a letter that formally requests the release of your home and should give your lender a detailed account of your business assets and why you think they're now sufficient to secure your business debt.
Be sure to give your banker the time and information he needs to make an informed choice. If his answer is still no, it may be time to find a fresh horse. The old adage about not burning bridges applies to borrowing money too, so changing lenders may be better for you in the long run than leaving your current one on bad terms.
Doug Hood is a co-founder of Rainmaker Capital Corp., a capital acquisition consulting company in Cartersville, Georgia. Co-founder Marilea S. Hood contributed to this article. Send questions or anecdotes via e-mail to firstname.lastname@example.org.