Ask your service providers before you engage them, to what extent do they use AI, and be sure to triple check their work.

So I asked it, and sure enough, it couldn't access one of the source docs so it used "placeholder numbers" to complete the request.

It took a bit longer than normal, but eventually spit out a decent looking set based on how I have trained it to generate data. A few of the numbers looked off for the size of the deal (rounded large 000's)...

If any lender does the "just make your loan payment and you'll be fine" pitch, ask them what their Special Assets Group has to say about it. They have more power than you think they do.

- Require immediate payment in full.
- Collect all amounts from any borrower or guarantor.
- File suit and obtain judgement.
- Take possession of any collateral.
- Sell, lease, or otherwise dispose of collateral at public or private sale.

If you are struggling but yet to default, your lender wants to work with you (most anyway) and will do what they can to prevent a full breakdown - BUT IF YOU DO DEFAULT - they can, and will:

Become the subject of a civil or criminal action that Lender believes may materially affect the Borrower's ability to repay the note.

Don't: break the law, be under insured, defraud your clients, ignore labor regulations, ignore State or Municipal statute.

Reorganize, merge, consolidate, or otherwise change ownership or business structure without Lender's prior written consent.

Don't decide to give your minority partner a majority stake a day after closing and don't plan on adding a couple HoldCos after the fact to skirt guarantees.

Have any adverse change in financial condition or business operation that Lender believes may affect the ability to pay the note.

Closing the Business or a location, loss of clientele, default on lease agreement, death of partner, or anything that might reduce the capacity of the Business.

Have a receiver or liquidator appointed for any reason, or make an assignment for the benefit of creditors.

You can't engage a third party to liquidate business assets for the benefit of any lender (or yourself), and you can't assign (transfer ownership) any of these assets to said 3rd parties.

Become the subject of a proceeding under any bankruptcy or insolvency law.

This includes voluntary and involuntary, and covers all chapters (5, 7, 11, 13), regardless of the circumstances.

Fail to pay taxes when due.

This can and does include sales tax, business personal property tax, real estate taxes, payroll tax, etc. If it ends in the word "tax", pay it.

Default on any loan or agreement with another creditor, if Lender believes the default may affect the ability to repay their note.

Hint: they always believe that an external default is bad and will lead to the snowball effect. Don't think that you are protecting the Sr. debt by not paying others.

Fail to disclose any material fact, or make false or misleading statements, to lender or SBA.

Don't keep secrets from your lender or the SBA, and in the event you find yourself facing some scrutiny, do not lie to them.

Fail to preserve, or account to Lender's satisfaction, any of the collateral or it's proceeds.

All collateral must be kept in pristine condition, and cared for in a way to not impair its value or function, especially should the lender need to liquidate.

Default on any other loan with Lender.

Basically, play by the rules and make your payments on all loans with your bank, SBA or not. Pay extra close attention to the Business Loan Agreement because non-SBA loans have different rules.

How do you know if you have defaulted? What do you do when you realize that you are close?

From SBA Form 147:

Collateral is a very hot topic with SBA loans, and if you don't know how the lender is governing the collateral that secures their debt, ask someone who knows - like me!