Overwhelmed with Small Business Debts? Consider a Debt Relief Program
How to handle your company's unmanageable debts
Many small business owners are known to explore a plethora of options in accessing funding for their businesses knowing very well that small business loans are not easy to acquire. Most lenders have become extra selective on who they lend their money to. In most cases, they are obliged to lend capital to business owners with proven track records of personal financial commitments, as well as profitability.
In this regard, many small business owners are forced to use whatever means to get funding for their businesses. They are at times, required by the lenders to secure loans by committing their personal assets and other guarantees. All these perfectly make sense when business is running smoothly and doing well.
Tough Economic Times
However, small business owners may be in dire problems when times are tough and the business is extensively struggling to meet its mandatory obligations such as paying loans or business credit cards. In typical small business fashion, owners may have very minimal chances of waiting out on these tough economic times and may even go into deeper debt by borrowing against personal assets and even charging up their credit cards.
Now, imagine a situation where the economic slump persists and your small business sinks into even more unmanageable debts, which will obviously be accompanied by high interest rates.
It is under such times that small businesses are left with very few options, but to turn to a business debt relief program.
Having a Working Plan is everything
It is essential that small businesses struggling with debt should structure a working plan on how to get out of the debt situation. This should also be followed with a practicable plan on how to avoid debt accumulation in the future.
In this regard, you have to be honest with yourself and your creditors.
Many times, small businesses get into trouble partly because of personal financial issues. With that in mind, it is crucial to consider a business debt relief program that would help you lower your debt payments and structure your finances. Remember that the plan should be clear and provide solutions that you can present to creditors. This will require you to understand the nature of the problem and come up with a debt payment plan that will likely work for both you and your creditors. The debt payment plan should include:
Listing your debts
This requires that you list the creditors, the amount you owe them and interest rates being charged on each debt.
Looking for Viable Options
Look for alternative ways to lower your rate of interest. Call up your creditors to negotiate a lower rate and transfer debts from high-rate cards to low-cost cards. Again, look for other refinancing alternatives such as revenue based loans or loans from friends and relatives, as well as peer to peer lending.
Repaying Your Debts
Start with the debts that cost the highest and work your way down to the lowest cost debt. You should try to balance the repayment plan so that some creditors do not feel neglected.
Have a Firm Grasp of Your Debt Relief
It is important to approach each of your business' creditors and clearly explaining to him/her the nature of your cash flow problems and present a debt repayment plan. It is recommended that you ask them and negotiate for a reduced interest rate and request them to spread out the payment over a longer duration.
Again, you can consider consolidating your debts. For instance, unsecured loans such as vendor bills and credit card debts can be rolled over into a single debt with lower interest rates and monthly payment. On the same note, having a secured loan can perfectly work to your advantage as the lending institution will be guaranteed of retaining the collateral in the event that you fail to repay the loan.
As a small business owner, there are a lot of things to consider before settling on any debt relief option.
Before taking any further step, consider whether the debt relief will be viable for your financial feasibility or whether it will massively affect your long-term credit and business credibility.