Review Your Business Debt Relief Options
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Your Business Debt Relief Options Summarized:
1. Chapter 11 Bankruptcy
Let's get this option out of the way right now before we look at some much better business debt solutions. For most small to medium sized businesses, chapter 11 bankruptcy is really not an option. I say this from both a cost perspective as well as a logistical one.
Most lawyers will ask for $10,000 to $15,000 before they will even start a chapter 11 file for you. Needless to say the process is expensive. Your company would likely be much better served by using that cash elsewhere.
Secondly, you may very well scare off all of your creditors from doing business with you in the future by filing for chapter 11 bankruptcy.
Finally, this particular business debt relief option takes makes of the control of your company out of your hands and/or your management teams hands.
Let's take a look at a much better business debt relief solution...
2. Business Debt Negotiation
When planned and executed properly, a solid business debt negotiation plan is likely your companies best hope of solving its debt problems, improving its cash flow situation, and keeping key creditors happy.
Business debt negotiation works by restructuring the debts of the company in order to improve current cash flow and reduce the overall debt burden. It avoids litigation by including your creditors in the process, which in turn saves both sides the cost of legal fees and court fees. It can be a win win situation for both parties.
Under this type of restructuring creditors are paid a larger portion of debts owed to them if they agree to stretch out the payback term. If they want cash now, they typically will have to settle for a small percentage of the debt that is owed them.
This type of business debt relief program, although seemingly simplistic in its explanation, can be quite complicated. For this reason we recommend that you and your business seek professional debt restructuring advice. We typically refer our clients here to receive a free, no obligation business debt relief plan. This company employs a highly skilled team of professionals including lawyers, lenders and financial advisors to help draft and execute your unique business debt negotiation plan.
For a more in depth discussion on business debt negotiation help click here.
3. Business Debt Loans
This is definitely the most commonly thought of business debt relief option. In the right circumstances a business debt loan (or debt consolidation loan) can serve a purpose. However, many small to medium sized businesses find it difficult to secure such financing.
Business debt loans are useful if:
a. the interest rate on the new loan is significantly lower than the interest rates on the existing debt and/or
b. the repayment time frame is much longer than on the existing debt, thus presumably making the monthly payments lower, and easier to handle.
If this is an option that interests you, then the first place to look for this type of loan is of course your bank. Failing that, there are some other options.
One company that we recommend to our visitors works with businesses to provide fast loans up to $100,000 with no collateral. Depending on whether you and your business meet certain criteria you may be eligible for a loan at prime plus 2% with a term as long as 7 years. Visit them here for more information and to fill out a free application.
Another innovative product that this company offers is a Visa/Mastercard cash advance of up to $100,000. In other words, if your company accepts visa and/or mastercard payments they will work with you to free up some valuable cash. Click here for more information on this unique program and to find out if your company qualifies for this business debt relief option.
4. Business Debt Consolidation
This type of business debt relief option works very much the same as debt consolidation programs for consumers. It does not involve a new loan as many people mistakenly think. Instead, a debt consolidation company works on your behalf to lower the interest rates your company is currently paying on its unsecured debts. In some cases the payment periods on certain debts can be adjusted to suit your company's cash flow needs.
Click here for a more in depth discussion of business debt consolidation.
For a free business debt consolidation analysis click here.
5. Invoice Factoring/Purchase Order Financing
Although different, these business debt relief vehicles can help a business to free up valuable cash.
Invoice factoring and/or purchase order financing involves selling these two forms of future cash flows for a reduced price now. Thus putting money that may have taken 30 to 90 days (or more) to come in, into your business' bank account today.
6. Commercial Mortgage/Personal Mortgage Or Home Equity Loan
Commercial Mortgages: If your company owns real estate, there may be some equity available there to pay off some business debts. The theory is the same as with an unsecured business loan. The interest rate will likely be much lower on a secured mortgage than on your existing debts. In addition, the monthly payments will be much more manageable.
Personal Mortgages: Many small (and medium size) business owners may have to resort to securing business loans etc. with their personal guarantees or using personal assets as collateral. Although you should try and avoid this at all times, in some cases you may have no choice.
By refinancing your home mortgage or taking out a home equity loan or HELOC (home equity line of credit) you could free up cash that could be used to pay down business debts. Depending on how your business is structured this may be a viable business debt relief option for you.
Need more business debt relief help? Start with our business debt help guide. Find information and articles to solve all of your business debt relief needs.
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