Chat with us, powered by LiveChat


Business Debt Relief Glossary and Definitions

Common Types of Business Debt

Business Loan – A loan taken out by a business, often from a bank or online lender. Business loans have set repayment terms and interest rates.

- -

Line of Credit – A flexible loan businesses can draw from as needed, up to a set limit. Interest is charged only on the amount used.

Merchant Cash Advance – A lump sum payment to a business in exchange for a percentage of future credit card and debit card sales. Not technically a loan.

Equipment Financing – Funding to purchase equipment like machinery and vehicles. The equipment serves as collateral if the loan isn’t repaid.

Business Credit Cards – Credit cards opened in a business’s name, useful for managing expenses but can quickly accumulate high interest charges if balances aren’t paid off.

- -

Shareholder Loan – Also called an owner’s loan. Funds loaned to a business by its shareholders or owners. May have flexible repayment terms.

Accounts Payable – Money a business owes to vendors, suppliers, contractors for services or goods received.

Tax Debt – Unpaid taxes a business owes to state or federal tax authorities, including payroll taxes, sales tax, and income tax.

Options for Debt Relief

Debt Consolidation – Combining multiple business debts into one new loan with one monthly payment. This can potentially lower monthly payments but increase total interest paid over the loan’s duration.

Debt Settlement – Negotiating with creditors to pay a lump sum that is less than what is actually owed to have the debt considered “paid in full.” Can negatively impact credit score.

- -

Debt Refinancing – Taking out a new loan to pay off an existing loan, ideally with better terms like a lower interest rate to reduce monthly payments.

Bankruptcy – A legal process where some or all of a business’s debts are discharged. Chapter 7 bankruptcy liquidates assets to pay creditors while Chapter 11 involves restructuring debts.

Debt Forgiveness – Creditors may agree to forgive a portion of debt owed to provide relief to struggling businesses. However, forgiven debt is usually considered taxable income.

- -

Hardship Program – Some lenders offer hardship programs to temporarily reduce or suspend payments for businesses facing financial challenges. Interest continues accruing in most cases.

Key Terms Related to Debt Relief

Debtor – The person or business that owes money to creditors.

Creditor – The person, business, or institution that is owed money.

Principal – The original amount borrowed or owed, not including interest or fees.

Interest – The cost of borrowing money, charged as a percentage of the principal.

Default – Failure to make loan payments as agreed. Can result in penalties, increased interest, and credit damage.

Delinquency – Being late on a payment but not yet in default. Delinquencies negatively impact credit.

Debt-to-Income (DTI) Ratio – Compares minimum monthly debt payments to pretax monthly income. Used to evaluate ability to take on more debt.

Statute of Limitations – The window of time creditors have to sue for repayment of a debt. Varies by debt type and location.

Solvency – The ability to pay debts and other liabilities as they come due. Insolvency means being unable to repay debts.

Collateral – An asset pledged as security on a loan that can be seized if payments aren’t made.

Lien – A legal claim on an asset as security for a debt. Must be resolved before selling the asset.

Promissory Note – A signed agreement detailing repayment terms for a loan or debt. Serves as legal evidence of the debt.

Personal Guarantee – Agreement where a business owner personally guarantees repayment of business debts. The owner’s personal assets can be pursued.

Chapter 7 Bankruptcy – Business assets are liquidated and proceeds pay outstanding debts. Remaining debts are discharged. Business ceases operations.

Chapter 11 Bankruptcy – Businesses restructure debts while continuing to operate. Owners often retain control in exchange for repaying some debts over time.

Discharge of Debt – Release from the legal obligation to repay a debt. However, tax implications often still apply.

Delancey Street is here for you

Our team is available always to help you. Regardless of whether you need advice, or just want to run a scenario by us. We take pride in the fact our team loves working with our clients - and truly cares about their financial and mental wellbeing.

"Super fast, and super courteous, Delancey Street is amazing"
$500,000 MCA Restructured Over 3 Years
"Thanks for helping me in literally 24 hours"
$250,000 SBA Loan Offer in Compromise
"Great choice for business owners who need a trustworthy partner"
$350,000 MCA Restructured Over 2 Years

In The Media

Delancey Street CEO discusses ways to reward employees
Delancey Street CEO discusses the benefits of franchising on Forbes.
Delancey Street CEO discusses management on AMEX.
Is JSZ Financial Co., Inc. a Scam?

In today’s financial landscape, it is crucial to be cautious…

Is Kansas Counselors, Inc. a Scam?

In today’s world, where debt collection agencies are prevalent, it’s…

Is KAPS & CO LLC a Scam?

In today’s world, where debt collection agencies play a significant…


In today’s financial landscape, consumers are increasingly concerned about the…

Is Kauai Credit Adjusters, Limited a Scam?

Debt collection agencies play a crucial role in the financial…

Delancey Street simply gets it. You're talking to experts.
Steven Norris
Get Help Today

Ready To Get Started?

If you have questions, feel free to shoot us an email, or fill out our live chat.

Schedule Consultation