We started a small franchise business (Quiznos) 4 1/2 years ago.  At the time it seemed like a good idea.  My mother was moving in from out of state and she didn't have a job but had managed a McDonald's in the past.  My wife and I thought this would be a good way to learn about business with little risk and have my mother as the full time manager.

I had an existing relationship with BankOne and approached them for an SBA loan in the amount of $150K.  Somehow in the process we were switched to a regular commercial business loan.  We had setup an LLC to attempt to protect ourselves, but the bank forced the signature of a Personal Guaranty to close the loan, with phrases such as "Guaranty is Unlimited" and "includes any and all indebtedness to Lender and is used in the most comprehensive sense and means and includes and any ALL of Borrower's liabilities, obligations, and debts to Lender, now existing or HEREINAFTER incurred or created, including, without limitation, ALL (and a list that goes on and on) .... wow !  This begins the root of our problems.

Over the last year and a half our sales have dropped 40%.  We did everything in our power to increase sales and decrease costs.  We renegotiated terms with our landlord, changed vendors for purchases, and decreased labor as much as possible (even harder with the new minimum wage laws).  We also approached the bank (now Chase after absorbing BankOne) and asked to restructure our debt.  The response from the branch manager was "You have excellent history of paying your debt on time .. why would we want to renegotiate terms ?".  We explained to him the upcoming cash flow problems and showed him in detail on our P&L statements.  His response was still, "You have to have missed some payments before we will believe that is the case".

Around this same time the ARC SBA loan program details were coming out, so we thought, "Great, excellent timing, this is perfect".  Chase was on the list for the ARC program and we submitted our paperwork in the very beginning stages of the program.  We were denied because of lack of "profits" within any of the last three years.  One year we lost maybe $1,200 and another we had lost $7,000. Of course these figures include depreciation, which if was taken out we were profitable.  The wording of the ARC should have been "cash flow positive" not "profit".  What small business "trys" to show a profit ?  Not many I know, the enticements are setup in such a way that most small businesses try to not show a profit.

So after being denied, we went back to the bank and again the branch manager encouraged us to "miss a few payments to force us to work with you".  He made it sound like it was no big deal and this was the way to deal with the problem.  I informed him our backs were already against the wall and it was either pay the rent or pay the loan, and landlords tend to lock doors when you don't pay rent.

The calls and letters started about 30 days after we missed a payment.  We decided to wait a little longer to get the most negotiation room from "now you see we are serious and can't pay" routine that the Chase branch manager informed us would work.

At 45 days out I logged in online to check my personal account at the bank and saw that they had deducted the payment from my personal account !  I guess I had assumed they would go after LLC business assets before invoking the personal guaranty.  I guess they went after the easiest money first !  I immediately closed all my accounts at the bank and am currently without a bank.  I do not know if the banks have reciprocity with each other and can Chase get to my personal funds at another bank as easily as they drained my account ?

I want to pay this debt, I thought our business would do better, we have managed to stay afloat, but only from not paying this debt.  If we are forced to pay under the existing terms, we will be forced to close.  It seems to be in the best interest of the bank to want to help.  Doesn't make much common sense.  Also doesn't seem like the banks and large corporations live by the same rules.

For example, I also had taken a risk and invested in Washington Mutual Bank stock (WAMU) because the CEO at the time said they had cash to ride out a few years of problems.  No sooner had I invested than the Feds swooped in over a weekend, declared them insolvent and GAVE the good pieces to JPMorgan Chase.  So I get stuck with 6 years of loss writeoffs and Chase gets the good pieces of the bank.

The other kicker is that before all this started we went to Chase to do a mortgage for a piece of property.   They refused because in the area there were not enough comps to justify the asking price.  We were forced to go with a private mortgage company.  Guess who they sold the loan to a few months later ? .... you guessed it, Chase.

So my questions are :

- what is a reasonable request for restructuring of the debt ?  Is it reasonable to ask for 6 months of no payments ?

- If we continue to not be able to pay this debt and I open a personal account at another bank, can they get to this money as well ?

Thanks for taking the time to read our story.  The picture is me pulling my hair out from this nightmare.