What Will Happen If I Can't Afford My Loan Payments? with Caroline Nelson and Irasema Bañuelos
In this episode of CIC’s Let’s Talk Small Biz Finance Podcast, Caroline Nelson and Irasema Bañuelos discuss what can happen when a small business can’t make loan payments.
They explain common loan documents, why contacting a lender early matters, and how missed payments, default, collateral and personal guarantees may affect a borrower. The conversation is informational, not legal advice; the hosts recommend consulting a lawyer or lender with specific questions.
About the Host:
Caroline Nelson is the Chief Operating Officer and Director of Lending at Community Investment Corporation (CIC), a Tucson-based 501(c)(3) nonprofit that specializes in small business lending, crowdfunding, and alternative financing in Southern Arizona, including Cochise, Graham, Greenlee, Pima, Pinal, Santa Cruz, and Yuma Counties, in addition to programs supporting first-time homeowners and education.
She is joined today by Irasema Bañuelos, CIC’s Senior Small Business Lending Manager.
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Timestamps
0:00 Introduction and why they’re discussing missed loan payments
0:52 Informational disclaimer: this is not legal advice
1:15 A loan as a contract and what it means to understand its terms
2:20 Promissory notes: repayment terms and the promise to pay
3:07 Security agreements and collateral
3:50 Checking which assets are listed as collateral
4:12 Deeds of trust and property used as collateral
4:37 Personal guarantees and personal responsibility for business debt
6:01 What to do when you realize you may miss a payment
6:55 What may happen after a missed payment
7:40 Asking a lender about options for longer-term financial trouble
8:38 Default provisions and what they may mean
9:53 Possible consequences of default, including credit impacts, collateral and collection costs
11:57 Why communicating with a lender can help open a path forward
12:46 Secured versus unsecured debt
13:55 Reviewing business finances, cash flow and expenses
15:16 Closing advice: think carefully before borrowing, understand loan costs and read the documents you sign
17:21 Final reminder to contact the lender and communicate early
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