Is Small Business Debt Relief for Me?

In 2008 more than 2 million businesses in the United States filed for bankruptcy protection. This is usually approached as a last option as a means of trying to salvage something of a company that may be failing or struggling under severe financial distress. Often this means the end of the company, however, even if they file for reorganization bankruptcy rather than a complete protection from debtors and any debts owed.

There Is Another Option

Small business debt relief is an option where professional counselors work with you to review your business situation, your books, your income, your debts and your assets and offers one of several alternatives to bankruptcy that may be sufficient to pull your business out of a financial slump once and for all.

• Debt Consolidation will take your business's unsecured debts and bring them all together into a single loan with a lower interest rate and monthly payment that you will find much easier to manage overall. The consolidation loan may also take the form of money earned from selling property or land that you have for the business (which may require relocation). Debt consolidation has the least effect on your business credit and is best recommended for those businesses who still have a strong customer base and income level.
• Debt Negotiation is where the debt management company will go to your business lenders and negotiate on your behalf in order to lower the total amount due on your debt - sometimes as low as $.60 cents on the dollar owed - and/or negotiate lower interest rates for your various debts. Debt negotiation can mean a substantial savings on the debt you owe and how much you will have to pay monthly to the company that consolidates your debts for you. The downside to this is that if you use this method, it will usually mean a closing of your accounts that are included in the debt negotiation, and if they are accounts that are critical to your business operation, you may not want to involve them. Debt Negotiation is an option best used by those businesses that have suffering or dwindling sales, but still possess a reasonably steady stream of income.

Debt relief companies usually operate for a fee, which shouldn't be paid up front before the company has spoken with your creditors for you and made sure that they can actually negotiate on your behalf. Once an agreement has been reached, they will probably request a payment amount based on the amount of debt that they are negotiating on your behalf in addition to requiring a small percentage of the monthly payment amount they get in order to pay toward your loans.

When Small Business Debt Relief Will Not Work

If your company is struggling but still maintains a revenue stream that you can tap into, starting early with debt management can bring you quickly needed relief that will enable you to regain control of your finances. If, on the other hand, it has been awhile since you’ve seen customers and you are running out of funds of any type, then small business debt relief may not be the best solution for you as opposed to simple bankruptcy protection.

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