As a business owner whose worked so hard to build up the business from ground up, hearing the words "Special Loans" sends the chills down the spine.

For those who don't know, Special Loans is a separate department of the bank that is specialized in managing troubled clients.

Companies with any of the following qualities can be considered troubled:

• Losing money

• Over leveraged

• No liquidity

• Being sued

While these are all bad, the most important factor is this: no realistic plan of recovery.

Why is being in Special Loans so bad?

Special Loans is responsible for managing the bad credits - companies that have a high chance of going bankrupt. This means high risk and whenever risk is high, interest rates will be high. Much higher.

Special Loans also has the ability to demand on your loan. This forces the company to find another lender to repay the bank. If it can't, the bank will be forced to liquidate the company's assets.

Even worse, Special Loans can force a company into bankruptcy.

What happens when you are in Special Loans?

Everything above sounds scary for a company, and it should be. You don't want to be in Special Loans.

But what if you are? What happens now?

Being in Special Loans means you work with a veteran banker who is experienced in restructuring debt. A full financial assessment is completed to determine the viability of the business going forward. This is typically done with the help of a 3rd party consultant.

Once the preliminary diligence is completed, a recovery plan is created with actionable steps. This involves selling assets, cutting expenses, or even having an insolvency trustee manage your debt.

If you foresee your company to spiraling out of control, it's best to seek for professional help before you are sent to Special Loans.