Distressed Credit

Distressed credit means the borrower is having trouble repaying the loan and the lender is at risk of not getting their money back. This can happen in both real estate and small to medium businesses. In real estate, an example of distressed credit could be a developer who can't make their loan payments on a property. This could happen if the property doesn't lease out as planned or if there are changes in the real estate market. The lender may end up having to take the property back and sell it to get their money back. In small to medium businesses, an example of distressed credit could be a restaurant that is struggling to pay back their loan. This could happen if the restaurant isn't making enough money to cover their expenses or if there is increased competition in the area. The lender may have to restructure the loan or take ownership of the business to try to recoup their losses.