Forbearance: Saving Your Business or Closing Units
Forbearance saves a business only when it buys time to fix cash flow or choose an exit; otherwise it closes units while debt stretches.
| By | The Long Game — Newsroom |
|---|---|
| Filed | 8 November 2026 |
| Read | 3 MIN |
You are being asked to sign or extend forbearance. Out West Restaurant Group had 99 Outback restaurants and more than $340 million in annual sales in 2018. Its lender issued a default notice in April that could let it end the forbearance agreement at any time.
The lender may call the pause relief. The signature may keep the loan from accelerating, but it does not remove the fee. The owner's job is to decide whether the pause is a bridge to a fix or a substitute for one.
The fee is paid in units, cash, and control
Mortgage forbearance has returned to a role as a short-term hardship relief tool rather than a durable payment plan. It postpones the repayment problem rather than eliminating the obligation. For a leveraged multi-unit business, missed payments, interest, fees, and covenant pressure do not disappear.
Borrowers in extended mortgage forbearance faced an average expected repayment of $8,300 in February 2021. As of March 2025, active mortgage forbearance covered only 0.36% of mortgages, or about 180,000 homeowners.
CARES Act forbearance restricts refinancing and can make buying a new home harder because the borrower must resolve the forbearance exit at the same time. For conventional mortgages, Federal Housing Finance Agency rules make borrowers eligible to refinance after three consecutive on-time payments following forbearance and a completed loss mitigation solution. Borrowers who have exited CARES Act forbearance have often paid the missed amounts at loan maturity, using cash from a refinance or home sale.
Out West ran 61 Outback Steakhouse units in five Western states. After 2018, it made four unsuccessful attempts to sell itself. On Oct. 25, it held $5.7 million in cash and projected $3.4 million by the bankruptcy filing. Bloomin' Brands, Outback's parent, entered a $26.3 million bid for the assets and included $5.5 million in debtor-in-possession financing. The franchisee's overall debt grew from $269 million in late 2020 to $449 million in 2026.
The pause needs a destination
The strongest objection is that forbearance preserves the company while sales recover. Sometimes that is true. A short pause can protect payroll, keep a few units open, and give management room to renegotiate leases or sell noncore assets. The problem begins when the pause becomes the plan.
When the business is still losing cash, the pause only delays the lender while the owner waits for a better quarter. In a decade-minded view, that is a bad trade: you are giving up ownership, cash, and units for months that may not return, while interest, fees, and covenant pressure keep compounding.
A forbearance agreement should say what happens at the end. Without that, the owner is signing an open-ended pause. Ask what cash is needed to exit, what assets can be sold, what covenants will be tested, and whether the lender will accept a partial payoff, a recapitalization, or a sale to a third party. Keep the answers in writing.
The pause can buy a capital raise, a loss of control, or a smaller business: a whole-debt refinance, lender control of the assets, or closed units while the debt stays. That is the fee, and it is paid in the owner's balance sheet.
The ledger comes before the signature
Before accepting or extending forbearance, write down the ledger.
- Units you will close or fail to open during the forbearance period.
- Cash you will lose to interest, fees, working capital, and owner support.
- Control you will surrender through covenants, reporting, lender consent, or asset restrictions.
- Exit options you will keep, including sale, recapitalization, asset sale, or controlled closure.
Then ask whether the ledger shows a way to a fix or an exit. If it only stretches the debt curve, set a deadline to fix or exit.
The decade test is how the business looks if the forbearance works. Fewer units and more lender control mean the forbearance may have saved the legal entity but closed the original business.
A decade-minded owner asks whether the extension preserves the option to exit on the owner's terms, not whether the lender will allow another extension. That is the staying power test.