Bankruptcy does not have to be your financial solution of last resort. A growing number of businesses recognize bankruptcy alternatives can help them protect personal and business assets, as well as begin negotiations to settle debts with a wide variety of creditors.
Businesses that encounter significant revenue decreases have only a few options to make up for the restricted cash flow.
Overhead typically goes first, as attention is paid to water and electricity usage. Then, businesses reduce salaries and/or eliminate jobs. If the initial cash flow improvement measures barely make a dent in your
revenue shortfall, you have to lower the amount you pay creditors each week and month. Lower credit payments equal larger debts that bite business owners in the pocketbook.
Debt creates severe financial limitations for business owners that eventually force business owners to seek bankruptcy relief. Although bankruptcy wipes the financial slate clean, it also prevents you from receiving favorable loan and credit terms for several years. Lawsuits and suppliers cutting off credit put your business on the brink of closure. However, most credit terms involve unsecured loans and credit. Unsecured debt gives you the flexibility to implement settlement, reorganization, and recapitalization strategies.
You can fight the good fight alone or hire an accomplished business debt settlement company to develop a plan to get you out of a financial hole.
Let’s focus on two successful methods for securing business debt settlement.
The Small Business Administration (SBA) runs an Offer in Compromise program “to help business owners who have defaulted on their small business loans and whose personal guarantees are called on to satisfy the remaining debt."
Also referred to as SBA loan workouts, the program allows the SBA to release loan recipients of their financial responsibility to pay back SBA issued loans.
The SBA typically agrees to a loan release, if the agency does not think it will receive payment for more than a business offers.
SBA guidelines often include complex language and financial concepts that require the expert knowledge of a credit counseling agency.
Unsecured business debt requires no collateral and no personal financial obligations to repay creditors.
Think of how invoicing works for businesses. Most vendors have lenient invoicing policies that allow invoices to go unpaid for30, 60, 90, and 120 days.
The vendors still deliver the goods and services you need to generate revenue. Eventually, vendors cease delivering goods and services, but at least you have created a little financial wriggle rom for your business.
When revenue drops, business owners should first change their unsecured debt payment schedules.
Reduce the amount you send to unsecured creditors and send the extra cash to secured creditors.
You need to pay off secured debt to get back the collateral you put up to receive loan or credit approval.
We help small business return to financial health, without putting them through the protracted bankruptcy process.
Contact us today or call (844) 360-3307 to learn how your small business can get back on track by implementing one or more business debt settlement strategies.