Leveraging your banker to disentangle assets in a divorce

The right financial services can turn an acrimonious situation to a positive one for your business

Joe Plucinak

Myriad issues arise for clients when a business is involved during a divorce. Navigating these issues as an advisor involves a host of emotional, financial and pragmatic concerns, notes David Nijhawan, business banker at KeyBank. Clients ask several common questions, he says.

1– “How can I completely separate assets amicably sooner than later?”
2– “How do I extract sweat equity out of the business so we can both move on?”
3– “How do I assuage employee fears, given the uncertainty in my company?”
4– “How do I preserve the viability of my legacy through my divorce?”

All of these questions present emotional, physical and financial strains on clients, and the answers rarely are black and white. Subtle nuances often determine the outcome. Nevertheless, the crux of every discussion remains the same: “How do we move on in our lives?”

“Clients and attorneys rarely think of their banker as integral to solving the quagmire of issues during a divorce; but in fact, it’s a niche area of financial services that can transform an acrimonious situation to a positive one,” says Nijhawan.

And, few professional advisors know that clients can use tools such as the SBA 7a program to help them achieve this positive resolution.

Clients can leverage the SBA 7a program in four main ways, says Jennifer Fern, senior SBA specialist for KeyBank in the Vancouver market.

1- Disentanglement – The SBA 7a program can be used to disentangle business/financial assets by allowing a divorcing couple to completely separate assets immediately, rather than draw it out over a course of time. This allows the client a clean break so they can start the path of healing after a contentious situation.

2- Extraction of Sweat Equity – The SBA 7a program provides a vehicle for a client to extract equity from the business versus having to use personal assets.

3- Peace of Mind – The SBA 7a program can help a business owner be at ease knowing that the business can live on with the least impact on operations and jobs of their employees.

4- Preserving Viability and Legacy – The SBA 7a program, because of its unique structure, typically provides for longer repayment terms, thus reducing cash flow strains and ensuring the viability and legacy of the business.

“This little-known tool can be an important strategy for bankers to offer, allowing clients to make a more informed decision as they move on to the next chapter of their lives,” Nijhawan says.

Joe Plucinak is vice president and business banking relationship manager in KeyBank’s Orchard, Wash., office. He can be reached at 503.551.3016 or joe_plucinak@keybank.com.