Get Relief from Overwhelming Business Debt
Running a small business is tough. ## You have to worry about so many things – inventory, payroll, marketing, customers, cash flow. It can get overwhelming real fast. And when the bills start piling up higher than the cash you got on hand, it can feel straight up scary.I feel you. But listen up: ## There are options to get your business back on track financially. You don’t gotta just sit there stressed, losing sleep at night over this. We can help you get that business debt under control again.At Delancey Street, our entire thing is helping business owners get out from under the crushing weight of too much debt. We’ve worked with all kinds of small businesses – restaurants, retail stores, contractors, online companies, you name it. If you owe money all over town for your biz, we are here for you. Now first off, know that you didn’t do nothing wrong. Debt itself ain’t bad or nothing to be ashamed of. ## Most businesses need some amount of debt to grow in the early days. The problem comes when that debt load gets to be more than the business can reasonably handle.That’s when you gotta take action to restructure or relieve some of that debt burden. If you ignore it, things will probably only get worse. You don’t want bill collectors calling 10 times a day or lawsuits piling up. That helps no one.So let’s break this down into steps, a’ight? Here’s what we can do to start getting your business back on track financially:
Step 1: Tally Up Exactly What You Owe
First things first: ## you gotta know exactly what debts your business has racked up so far. Make a big ol’ spreadsheet with the following for each debt:
-- Who you owe money to (the creditor)
- How much you owe
- What the debt is for (inventory, equipment loan, payroll, etc.)
- Interest rates on the debt
- Minimum monthly payments
- Late fees or penalties you’ve racked up
List out any business credit cards, lines of credit, equipment financing loans – all of it.This process can feel kinda daunting, but it’s an important reality check so you know precisely what you’re dealing with.
Step 2: Figure Out Where Your Cash Is Going Each Month
Next, let’s follow the money. ## Make another spreadsheet tracking what’s coming into and going out of your business bank account each month.On the income side, tally up:
- Sales revenue
- Any business investments/loans
And on the expenses side, track:
- Rent + utilities
- Payroll + taxes
- Inventory
- Insurance
- Loan/debt payments
- Marketing
- Office supplies + other overhead
Once you got all that itemized, the bottom line will show whether your business runs a monthly surplus or deficit.If it’s a deficit (spending more than you earn), that’s another sign debt relief could be wise to pursue.
-Step 3: See If You Qualify for Small Business Debt Relief Programs
There are a handful of government-backed programs that provide debt relief options specifically for struggling small business owners. Two big ones are the SBA 7(a) Loan Program and the SBA 504 Loan Program.The SBA 7(a) program offers low-interest loans up to $5 million that can be used for all kinds of business expenses – payroll, supplies, renovations, refinancing debt, etc. These loans are backed by the government, so they’re easier to qualify for than regular bank loans.Meanwhile, SBA 504 loans are specifically for purchasing fixed assets like real estate or heavy equipment. They offer very low down payments and long repayment terms up to 20 years.The catch is your business has to meet the SBA’s size standards to be eligible. But if you do qualify, these programs could take a nice chunk out of your debt burden.
Step 4: See If Your Creditors Will Settle for Less Than You Owe
If government programs don’t work out, the next move is trying to negotiate debt relief directly with whoever you owe money to. This is called debt settlement.The basic idea here is:
You go to each creditor and say, “Hey, business hasn’t been so hot lately. I can’t afford to keep paying what I owe you, but I wanna make this right. Can we agree on a lower amount that I can realistically pay off over time?”
Now, here’s the kicker: ## Most creditors would much rather get 70 or 80 cents on the dollar than have you default altogether. So if you approach them in good faith, there’s a solid chance they’ll agree to settle your debt for less than the full amount.Especially with all the COVID slowdowns still hurting small businesses, creditors know you’re not the only one struggling to pay. They’ll often play ball on debt reduction if it means getting something instead of nothing.
Step 5: Consolidate What You Still Owe Into One Manageable Payment
After settling your debts down to more affordable levels, the next move is to roll everything into one loan with one monthly payment. This is called debt consolidation.There are a couple go-to options here:Business Debt Consolidation LoansBanks like Wells Fargo offer specialized loans for consolidating business debts that let you lump sums owed across multiple credit cards, loans, etc. into a single fixed-rate loan with consistent payments. This can majorly simplify managing what you owe each month.401(k) Business FinancingIf the business is incorporated, another option is borrowing against the company’s 401(k) plan. ## Services like Guidant Financial facilitate this process, letting business tap their existing 401(k) funds and pay that money back over 5-7 years with reasonable interest. This can be an alternative to taking on more high-interest debt when cash gets tight.Consolidating your obligations into one predictable monthly payment makes staying on top of your debts way more manageable.
Step 6: Work With a Credit Counselor
Wrangling problem business debts on your own can be daunting. That’s why it helps to have a professional credit counseling service like Delancey Street guiding you.Here’s what we provide:
-- Debt management plan – We negotiate lower payoff amounts with your creditors and combine everything into one monthly payment that works for your budget.
- Get collectors off your back – We become the middleman and speak to collectors on your behalf to resolve disputes and stop harassing calls.
- Improve your business credit score – As you pay down debts, we help you implement practices to begin rebuilding your score over time.
- Ongoing money management – We offer financial literacy programs and coaching to help you make spending, savings and investing decisions that support the long-term health of your business.
Having an expert advisor on your team makes getting through this process 10x less stressful. We’ve done this hundreds of times before with all kinds of businesses. You can trust us to handle negotiations firmly but fairly so relief happens as quickly and smoothly as possible.And the best part? ## Our services don’t cost you a penny out of pocket. Our fees come from a percentage of the savings our debt management plans help you realize.So you get expert guidance to resolve your business debts while saving money. That’s a win-win if I’ve ever heard one.
Take Control of Your Business Finances Again
Dealing with serious business debt sucks. It can keep you up at night, hurt your revenue, tank your credit and generally make running a company way harder than it needs to be.But here’s the good news: You have options. With a few key steps – tallying up what you owe, settling debts with creditors, consolidating into one loan, working with a credit counseling service – you can get your finances back on track.And look, the economy is tough for a lot of folks right now. Needing help with debts in this environment doesn’t make you a failure. It makes you human.So don’t let pride or shame prevent you from seeking relief. Lean on the expertise and resources that are out there – like Delancey Street. Climbing out of oppressive business debt is possible.We can walk this path together. Reach out anytime and let’s talk options for getting your company back on solid financial footing. You’ve got this!