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Gettin’ Out of Debt: How to Restructure Your Business Loans

So your business has racked up a bit of debt, huh? Hey, it happens to the best of us. Loans can be tricky, and things don’t always go accordin’ to plan. But don’t sweat it! There are options out there to help restructure your business debt and get your finances back on track. This article will break it down nice and simple-like so you can understand the basics.

What Exactly is Debt Restructuring?

Debt restructuring basically means changing the terms of your existing loans to make ’em more manageable for you. This usually involves lowering the interest rates, reducing monthly payments, lengthenin’ the repayment timeline, or even forgivin’ a portion of the principal balance.The goal is to create a debt repayment plan that works with your business’s current financial situation rather than continuin’ to struggle under the original loan terms. It gives you some wiggle room to get back on your feet until things improve. Pretty handy, eh?

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When to Consider Debt Restructuring

You might wanna think about restructurin’ your business debt if:

  • Monthly loan payments are too high and hurtin’ cash flow
  • Revenue is down and you’re havin’ trouble makin’ payments
  • You need to free up money to invest back into the business
  • You want to avoid defaultin’ on loans or filin’ for bankruptcy

Basically, if your current debt load feels like a 1,000 pound weight around your neck, it could be time to loosen that noose a bit before you choke!

The Benefits of Debt Restructuring

Restructurin’ debt offers a few advantages over just continuing to struggle under crushing loan payments:

  • Lower Monthly Payments: Reducin’ interest rates and stretchin’ out repayment terms means smaller monthly bites. This helps short-term cash flow.
  • Avoid Default: Renegotiatin’ with lenders means you’re less likely to miss payments and default. No one wants debt collectors bangin’ down their door!
  • Focus on Growth: More wiggle room in your budget lets you invest in things that will grow the business rather than just treading water.
  • Peace of Mind: Fewer sleepless nights worryin’ about debt equals better health and focus overall. Can I get an amen??

The Potential Risks

Of course, messin’ with debt always comes with a few risks too:

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  • Balloon Payments: If you stretch out repayment terms, you may owe a big balloon payment at the end. Make sure future cash flow allows for this.
  • Collateral Loss: Lenders may ask for more collateral. Default could mean losin’ secured assets.
  • Credit Score Damage: Restructuring debt could negatively impact your business credit score, limiting future options.
  • Higher Long-term Costs: While monthly payments go down, you may pay more overall in interest charges over the full repayment period.

Common Types of Debt Restructuring

If you decide debt restructuring is the right move, here are some of the most common ways lenders might go about it:

Rate Reduction

This simply involves negotiatin’ a lower interest rate with lenders. Even a 1-2% decrease can make payments more affordable. Lenders might do this to avoid default.

Term Extension

Gettin’ approval to pay off debt over a longer timeline (e.g. 7 years instead of 5) means you can handle lower monthly payments. The tradeoff is potentially more interest paid over time.

Balance Reduction

In some cases, lenders will just cut you a break and forgive or decrease the principal balance owed. Don’t count on this though!

Debt Consolidation

This rolls multiple debts into a single new loan with one payment. It helps simplify things and may lower cumulative interest too.There are always multiple ways to skin the proverbial cat when workin’ with lenders! Shop around to find the best restructuring option for your situation.

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Tips for Negotiating Debt Restructuring

Hagglin’ with lenders makes most folks uneasy, but a few key negotiation tips can help score a solid deal:

  • Open communication is key: Keep lenders looped in early about struggles makin’ payments. Surprises strain goodwill.
  • Come prepared: Bring current financial statements, projections, and a specific proposed repayment plan to show good faith.
  • Know your leverage: Research state laws around collateral seizure and bankruptcy to understand lender motivations.
  • Anticipate objections: Have answers ready for why restructuring makes sense business-wise over the long haul.
  • Use competition: Talk to multiple lenders to incentivize offers. Shop those offers around too for the best terms.

At the end of the day, lenders want to get paid back without forceful measures. Your job is to convince ’em that restructuring helps make that happen!

Alternative Debt Relief Options

If renegotiatin’ with lenders falls flat, a few other options exist too:

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  • Sell Assets: Liquidatin’ unused assets like equipment and property can help pay down debt quickly.
  • Investors & Partners: Bringin’ in an investor with capital can allow you to pay off loans and gain resources to grow.
  • Bankruptcy: Declarin’ Ch. 7 or Ch. 11 bankruptcy stops collections and can discharge some business debt entirely. The nuclear option for sure though!
  • Debt Settlement: Hirin’ a settlement firm to negotiate lump-sum payoffs for pennies on the dollar is also an aggressive path to debt elimination.

These more drastic measures should only be last resorts if lender negotiations fail and the debt burden is truly unworkable.

Ready to Restructure?

Phew, that was a boatload of info to digest, I know! Long story short: If loan payments have your business feelin’ down for the count, debt restructuring offers a solid path to bouncin’ back. Slimming down interest rates, spreadin’ out timelines, consolidatin’ loans, and other maneuvers can help ease the pain.Sure, it requires some tough conversations with lenders. But showing you’re committed to eventual repayment gives you decent leverage to score better terms. And having an affordable debt payment plan lets you focus energy on business growth rather than barely treading water each month.Think restructuring could be the right move for your situation? Delancey Street’s lending team is always ready to chat! We’ll explore your options, give straight shootin’ advice tailored to your needs, and support you through those tricky debt negotiations. Don’t struggle alone in the dark – let us help chart a brighter path forward! We’d be happy to grab a coffee and walk through the ins and outs of restructuring your loans. Just holler anytime!

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"
Leo
$500,000 MCA Restructured Over 3 Years
"Thanks for helping me in literally 24 hours"
Jason
$250,000 SBA Loan Offer in Compromise
"Great choice for business owners who need a trustworthy partner"
Mary
$350,000 MCA Restructured Over 2 Years

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