Case Study #029: $125,000 Construction Business Loan
The client and the debtor were brothers who had always supported each other through thick and thin. When the debtor decided to expand his small construction business, he approached the client for a loan of SGD $125,000. The client, trusting his brother’s ambition and vision, transferred the funds without any formal documentation, relying solely on their familial bond and verbal understanding.
The debtor used the loan to purchase new equipment and hire additional workers. However, unforeseen challenges, including market downturns and project cancellations, caused the business to underperform. Over two years, the debtor was unable to repay any portion of the loan. When the client finally confronted his brother, the debtor argued that the loan was a “family contribution” and not meant to be repaid.
Frustrated and heartbroken, the client turned to JMS Rogers for help. Our team approached the situation delicately, understanding the emotional complexities of family disputes. By examining bank records, transaction dates, and messages exchanged between the brothers, we were able to establish that the funds were indeed a loan. JMS Rogers conducted numerous field visits to the debtor’s home and business premises to understand his financial standing and assess his capacity to repay. These visits were instrumental in conveying the seriousness of the debt and the importance of repayment. The debtor initially avoided these visits, but our consistent presence demonstrated the importance of resolving the matter promptly.
After thorough discussions, JMS Rogers facilitated a resolution. The debtor, initially resistant, eventually acknowledged the agreement. A repayment plan was devised, allowing the debtor to repay the loan over five years without jeopardizing his business.
What can we learn from this?
- Documentation is Key, Even Among Family: Trust is important, but clear, written agreements are essential to avoid misunderstandings. JMS Rogers can help formalize these agreements to protect your interests.
- Professional Mediation Prevents Emotional Fallout: Family disputes can escalate quickly when financial matters are involved. JMS Rogers’ objective approach ensures conflicts are resolved without straining relationships.
- Structured Repayment Plans Promote Accountability: By designing a manageable repayment schedule, JMS Rogers helped the debtor honor his commitment while sustaining his business operations.
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