Small Business Debt Relief Options
Thousands of American small business owners find themselves in desperate financial trouble each year. Some survive by tightening their belts and becoming more frugal. Often times, they use some form of small business debt relief. Before you give up and declare a Chapter 7 bankruptcy, there are are a few options that you can consider.
Small Business Debt Consolidation
If your small business meets certain requirements, it business may qualify for a debt consolidation loan from a lender. These lenders are non-profit. The interest rate on these loans are lower and more affordable.
You can seek a loan from a private lender if you cannot find or do not qualify for a loan from a non profit debt consolidation lender. This may require collateral and you may have to use personal assets to secure this loan and get a lower interest rate. There is always the risk of losing your assets if you default on payments.
A debt consolidation loan will pay off your outstanding unsecured debts and consolidate the loan into a single loan. You make a single monthly payment towards this loan.
Small Business Bankruptcy
Many small businesses have opted to take the bankruptcy option due to the recent financial crises.
You have two bankruptcy options if you want to keep the business open, you may enter into Chapter 11 or a Chapter 13 bankruptcy. These are known as restructuring options. These enable small businesses to renegotiate some of their unsecured loans and credit card debts.
These bankruptcy options may affect your credit score negatively but will keep your business running as opposed to a Chapter 7 bankruptcy.
Chapter 11 and chapter 13 bankruptcy both have a similar result. The judge will liaise with you and your creditors and work out a payment plan for you to pay your creditors. You have to come up with the payment plan and the court will present this to the creditors. This will initiate the negotiation process.
The plan may entail selling off some of the business’s non core assets in order to satisfy the secured debts if the business is large. It can sell off unused equipment or assets and operate on a smaller scale.
New repayment plans may be negotiated by the bankruptcy judge with your unsecured creditors. A Chapter 11 or Chapter 13 bankruptcy may not completely wipe out your unsecured debt. Some creditors may agree to reduce outstanding balance upon the judge’s request.
These bankruptcy options have helped many small businesses to stay open. This gives businesses time to look at reducing operational costs and looking at other ways of generating revenue. Restructuring has helped many small businesses to keep their doors open.
If you are struggling to keep your business afloat due to overwhelming debt, speak to our experienced business debt relief lawyers today. We have assisted many businesses with:
- Merchant Cash Advance Debt Settlement
- Merchant Cash Advance Lawsuits
- SBA Loan Default
- Small Business Debt Settlement
- Small Business Bankruptcy
Schedule your free initial consultation to find out more.