Most of us do not want to be tied up to a 9-5 job for a lot of reasons. Some does not really go well in an office setting and others just has too much financial ideas they want to explore. Whatever the reason is, the usual route people take to earn an income outside an office job is to set up their own business. But just as putting up a business is a gamble on its own, there are those that are not too lucky and find themselves in debt.
When you get to this situation, there are a couple of ways to get out of it. And even before you think of filing for bankruptcy, don’t! There are other ways of getting out of small business debt than just filling-up the papers for bankruptcy. if you do this, creditors will have a hard time lending money again over to you and you will have a tougher time setting up a new business in the future. It also downgrades your credit score which leads to tougher loan arrangements in the future.
There are alternatives in getting out of small business debt. But before you look into them, you must perform a business audit. Of course, this includes among others the hard numbers such as assets, cash on hand, actual debt and how much money you will need to get out of debt. On top of this, you must re-assess your business model again. You need to be honest in discerning if your business is still viable even after you get out of debt or will you be only prolonging the inevitable.
If you think business has a big chance to succeed as long as your debts go away, then this is the perfect time to look at your options on how to get out if it. The reason you need to be convinced is because you will need to convince other people as well – especially your creditors. This is the best approach on alleviating your business from debt because your creditors are the one who will have the final say.
There are basically two things you need to explore with your creditors to slowly get out of your small business debt – lower interest and longer payment timeframe. When you talk to your creditors, you need to convince them that getting out of debt will pave the way for your business to start earning more money down the line. It could be that your business is just hampered with the monthly payments that cash flow is affected. The bottomline is to let your creditors see the value of your business getting out of debt. Remember, they themselves also has a stake on your success. The more you earn, the more secured they are that you will be able to settle your monthly payment obligations with them.
If talking to your creditors does not work, explore consolidating your debts. Some people are against it as they see it as just getting into another loan, there is still wisdom in this option. The idea is to consolidate your debts with the one that offers the lowest interest rate. This is because as a general rule, the lower the interest rate is, the smaller your monthly payment will be.