Recently I have had the opportunity to consult a business that needed to refinance a loan. The loan was not very old and, of course, the question arises why refinance. The current lender was "calling in" the loan, of course, my next question was "why". Apparently the company had made a loan to the owner and the lender felt that it was beyond the scope of the intention of the loan. There could be a violation of the loan agreement as well. When you are in receipt of money in the form of a loan there are some things you need to keep in mind. The lender has significant leverage. You have to abide by the agreement and expect repercussions if you don't. Also you can run into trouble if your financial situation and cause the lender to "call in" the loan. You would be given some time to acquire money to pay off the funds, but you may be up against a rock and a hard thing. The point to all this is, know what is in your loan agreement. Don't try to be to tricky or clever. If there is any question about proper use of funds, ask your lender. If you are having financial difficulties, call the lender and keep them informed. Keep everything on the up and up. It will help keep you out of trouble.
