Recently, our small business debt relief lawyers have noticed that many of our clients are unaware about the ins and outs of small business debt. Having a substantial amount of knowledge on all thing related to business debt, our lawyers clarify some of the myths surrounding business debt.
- Business expansion not possible without debt.
Simply not true. Fortune 500 companies Apple Computer, Mattel Toys or Starbucks all started with next to nothing. According to research conducted by Census Bureau’s, 60% of all small businesses opened in a given year require less than $5,000 to start . Most entrepreneurs prefer not to begin their dream saddled with huge debt.
- A line of credit is needed to cover cash-flow inconsistencies.
This is not true. Entrepreneurs who exercise good accounting and budgeting practices, irrespective of whether they are seasonal or unpredictable, are able forecast their cash flow and be prepare for down times during the year. In addition, having some cash saved (retained earnings) allows you to become your own line of credit and prevent merchant cash advances as well as other forms of borrowing.
- Large purchases require debt.
It’s quite clear that incurring debt should be avoided as much as possible. However, does the same apply to larger purchases such as real estate or pricey equipment? Planning ahead and saving means that you do not have to incur large amount of debt. If you absolutely require expensive equipment, here are a few options available:
- Rent until you can pay cash.
- Outsources to avoid going into debt.
- Buys used instead of new at a substantially lower cost.
- You have to file for business bankruptcy if you cannot keep up with your debt.
Businesses who have made the mistake of undertaking large amounts of debt thing that bankruptcy is the only option. Depending on your lender and the type of loan, there are several debt relief strategies available to you. If you have defaulted on a business loan, have been issued with a lawsuit or are on the brink of default, our attorneys at ZocLaw.com can help. Also see: