What If Your Business Has Unmanageable Debt?
The biggest killer of wholesale and retail businesses, after lack of sufficient cash flow, is unmanageable and growing debt.
While it is very tempting, and often necessary, to take on debt while growing a business, taking on too much debt, and not being able to cover the monthly fees and interest, can push a business towards bankruptcy.
While debt can be beneficial to a business, since essentially it provides leverage to a business owner, the interest charged usually compounds, and can very soon result in an outstanding balance that is much larger than the initial debt that the credit card or loan usage created.
Luckily, there are options available, and a competent CPA or lawyer should be able to provide you with proper guidance.
There are options such as 0% interest credit cards for balance transfers, equity loans, Small Business Administration backed loans, angel investor loans, and bankruptcy solutions.
The most important step is to consult with a licensed financial professional who knows your personal and business situation.
While some businesses turn to payday loans and credit card based short term funding, these options can have exorbitant interest rates and fees, plus, the business owner can be personally liable for the money borrowed.
There are also debt resolution firms that can negotiate on your behalf with your creditors. It is very important that you fully research any debt resolution firm before engaging their services.
You might also consider incorporating your business, or creating an LLC, so that you can protect your private asses in the event of a business bankruptcy.