You can ask for a pause in business loan payments when your business is having financial trouble and you need help managing your debt. These pauses in payments are sometimes called “payment relief” or “deferments.”
It’s not uncommon to ask for a payment pause, and your lender should be prepared to hear you out. If at all possible, you should contact your lender before your business’s financial situation becomes truly dire.
Pausing payments isn’t your only option. Your lender can discuss your various options and how each will affect your loan payments.
We’ve developed this sample script you can use to call your lender.
We’ll start with a brief questionnaire to better understand the unique needs of your business.
Once we uncover your personalized matches, our team will consult you on the process moving forward.
This script was developed with input from Kevin Janusz, vice president and SBA lending manager at Beneficial State Bank and Maggie Ference, senior vice president, Small Business and SBA director at Huntington National Bank.
Your script for asking your lender to pause loan payments
Explain your situation in detail
You: “Hi, I’m hoping to speak with someone about a financial hardship I’m experiencing with my business and what my options may be for managing my loan payments.”
Lender: “Sure, I can see what I can do for you. Can you tell me more about the financial struggle you’re experiencing?”
You: “I’m having some cash flow issues, and I don’t have enough money at the moment to make my next few loan payments.”
Lender: ”Ok, and do you know what may be contributing to the cash flow issues?”
You: “Yes, [Explanation of Root Cause of Cash Flow Issues, e.g., difficulty hiring/retaining employees, loss of a key client account, supply chain issues, etc.].”
Lender: “That’s helpful to understand. And have you taken any action yet to address the issue and get back on track?”
You: “Yes, I’ve tried [Explanation of Efforts Made to Manage Cash Flow Challenges, e.g., multiple job postings on multiple platforms, new client outreach, attempts to negotiate better pricing in supply chain contract, etc.].”
Already missed a loan payment?
Offer your supporting evidence
Lender: “Ok. The more you can explain for me what’s led up to this point where you feel unable to make payments and the more documentation you can provide to show the steps you’ve taken to get back on track, the better position I’ll be in to help you.”
You: “Sure. I have my latest profit and loss statement and balance sheet. I also have [Documentation Proving the Efforts You’ve Made to Manage the Issue, e.g., screenshots of job postings on multiple platforms, ads or emails proving outreach to attract new clients, copies of communication with your supplier regarding contract negotiation, etc.]. I can send those over to you.”
Lender: “That’s great. Those should all be very helpful here. Please send those and any other documents you may have to support your request so I can review them in detail.”
Ask your questions
You: “Ok. And if you accept the request, how long am I able to pause payments for?”
The lender’s response here will vary depending on your loan type and the lender’s deferment policy. Typically, you’ll find that a pause can be anywhere from three to six months/payments.
You: “Will you report the pause to credit bureaus? If so, would that impact my credit score?”
Lender: “Yes, we do report deferments to the major credit bureaus. Typically, the payment pause is just noted in your credit report rather than directly impacting your score.”
You: “And how will the pause affect my future loan payments, once the pause ends?”
Lender: “Good question. The first thing to note is that interest will continue accruing on your payments, even while they’re paused. So that means your total repayment amount may increase. I can let you know how much your total repayment will be affected once I review everything more closely.”
You: “Oh wow, ok, I hadn’t thought of that.”
Lender: “Your monthly payments may increase for the duration of your term to account for the payments not made during the deferment period. Again, I can come back to you with the new loan amounts after I’ve reviewed your file.”
Note: Depending on the lender and loan type, instead of increased regular payments you may have the option of making a single, large payment, called a balloon payment, at the end of your loan term. And some lenders may allow you to extend the loan’s term length as part of the deferment process.
You: “I’m glad I asked. This is all really good to know. I guess I don’t really have a choice, though. At least if I can pause the next few payments that buys me time to figure out a longer-term fix and also make a plan for how I’ll handle the higher loan payments going forward.”
Lender: “Of course. There are also some other options we could look at for you instead of a pause in payments. For example, making interest-only payments or restructuring your loan or even opening a business line of credit.”
A quick guide to understanding these additional options:
You: “You’ve given me a lot to think about.”
Lender: “Yes, there’s plenty to consider here. But you have options, and we’re happy to work with you to see what we can do to help. I think we should schedule a follow-up call in the next couple of days where I can run you through a few options with real costs. When’s the best time to reach you?”
You: “[Days and Times You’re Available].”
Lender: “Great, we’ll talk soon.”
You: “Thank you. Bye.”