Running a small business can be extremely rewarding, but it also comes with financial risks and uncertainties. Many business owners at some point find themselves facing overwhelming business debt that feels impossible to repay. If your business is struggling under the weight of high-interest loans, payroll taxes, vendor bills or other debts, you are not alone. There are options available to find relief.Debt settlement programs through companies like Ondeck provide a path for business owners to resolve unmanageable business debt through consolidation and negotiated settlements for a fraction of what is owed. This can help free up cash flow to reinvest in your company’s growth and take control of your financial future.
How Ondeck Approaches Business Debt Relief
Ondeck does not offer blanket debt forgiveness or bankruptcy protection. Their business debt relief programs aim to consolidate multiple debts into one manageable payment through settlements and arrangements with your creditors. Their team of financial experts will assess your unique situation and work on your behalf to:
-- Negotiate with creditors to reduce total debt owed. Often creditors will agree to settle for 20-50% less than the full balance if they believe it is the best option to recoup part of what is owed.
- Consolidate multiple debts into one monthly payment with possible better terms. This simplifies payments and cash flow.
- Work with tax authorities to establish installment plans or currently not collectible status for overdue payroll taxes. This prevents growing penalties and interest charges.
- Obtain temporary relief or forbearance on payments while settlements are negotiated.
- Advise on options to avoid bankruptcy, lawsuits, repossessions.
Throughout the process, Ondeck assigns a dedicated account manager to personally guide each client and provide financial mentoring. They continue monitoring accounts and negotiating on your behalf until all settled debts are resolved.
What Types of Business Debt Can Be Settled?
Common examples of business debt that may be eligible for Ondeck relief and settlement programs include:
- Business Loans – Term loans, lines of credit, merchant cash advances, equipment financing loans. These often carry high interest rates and aggressive repayment terms.
- Unpaid Invoices – Overdue vendor bills and B2B invoices from suppliers and contractors.
- Commercial Leases – Rent arrears if you fell behind on real estate or equipment leases.
- Payroll Tax Debt – Unpaid federal or state payroll taxes including 941 taxes, unemployment taxes.
- Business Credit Cards – Maxed out cards charging high variable interest rates.
- Tax Liens and Judgments – Legal actions from creditors may result in liens, levies, or wage garnishment.
- Personal Guarantees – Business loans you personally guaranteed and now owe.
Ondeck has experience settling all the above debt types. They indicate eligibility is based more on your willingness and ability to pay back part of what you owe across all creditors.
What is the Process of Business Debt Settlement?
If you engage Ondeck for debt relief services, their team will guide you through the following general process:
-- Free Consultation & Evaluation – Discuss your situation to see if their settlement services could help resolve your debt. If so, agree to terms of engagement.
- Document Collection – Provide details on all outstanding debts and creditors to analyze how much can potentially be settled.
- Settlement Negotiations – Ondeck contacts creditors and collectors to negotiate reduced payoff amounts. This can take some time to reach agreements.
- Payment & Settlement – Establish monthly payments to Ondeck to be disbursed to creditors as negotiated settlements are reached.
- Debt Resolution – Ondeck continues negotiations and settlements until all target business debts are resolved.
A more detailed overview of the debt settlement process is provided by attorneys at Avvo. But in essence, the goal is to leverage expert negotiators to relieve your current debt burden through mutually agreed discounted settlements.
What are the Benefits of Business Debt Settlement?
Business debt settlement provides a path to resolve what feels like insurmountable debt into something manageable. Specific benefits include:
Cash Flow Freed Up – If you settle debts for less than you owe, more cash flow is freed up to invest in business growth or savings.
Lower Interest Rates – Debt consolidation may provide better repayment terms like reduced interest rates.
Expert Negotiation – The Ondeck team essentially negotiates in your best interests with creditors.
-Avoid Bankruptcy – Settlements allow avoiding business bankruptcy and the long term damage it causes.
Peace of Mind – Having a plan to resolve overwhelming debt provides relief mentally and emotionally.
What are Risks and Considerations?
While business debt settlement can seem like the perfect solution, there are some downsides and risks to consider:
-Credit Score Damage – Your personal or business credit score will likely drop from missed payments and negotiated settlements. This can limit future financing options until credit is rebuilt over time.
Tax Implications – Settled debt could be treated as taxable income. Consult a tax professional to understand possible tax liabilities.
Collection Efforts Continue – Creditors may continue collection calls and letters during the negotiation process. This can add stress until settlements are reached.
Not All Debt Eligible – Some types of secured or recent debt may not be available for settlement. And creditors are not obligated to accept settlement offers.
Fees – Debt settlement programs involve fees for the consolidation and negotiation services provided. Make sure you understand Ondeck’s fee structure.
How Much Could Business Debt Settlement Cost?
According to the FTC’s guide to settling your debts, fees for debt settlement services often amount to 15% to 25% of the total enrolled debt. However, each program is different.Ondeck uses a performance-based fee structured based on successfully negotiated debt reductions. The more they save you, the higher their fee. This incentive model helps align their interests with clients for the best settlements.Exact fees vary case-by-case based on amount of debt and creditors targeted. During your free consultation, Ondeck should provide complete fee estimates and payment program costs so you can make an informed decision on whether settlement makes financial sense for your situation.
Could Debt Consolidation Loans Be an Alternative Option?
Debt consolidation loans allow rolling multiple debts into a single loan, ideally with better interest rates or terms that provide some breathing room. Banks, online lenders, or non-profit credit counselors provide these.This can be an option for some businesses, but it still involves eventually repaying the full debt amounts. The benefits of debt settlement programs are the ability to resolve debts for much less than you owe.
What Steps to Take Before Considering Business Debt Settlement
Managing overwhelming business debt is challenging emotionally and financially. Before exploring relief options, business owners can take proactive steps to stabilize their situation:
Cut Expenses – Reduce all non-essential spending to conserve cash flow for paying down debts.
Seek Payment Plans – Contact creditors directly to explain hardship and request temporary payment plans or forbearance.
Sell Assets – Liquidate assets not critical to operations to access additional funds for debt payments.
Raise Prices – If possible, increase prices or add fees to boost revenue.
Communicate with Creditors – Maintain open dialogue on your situation so creditors understand your circumstances and commitment to repaying them.
Is Business Debt Settlement the Right Choice?
There is no one size fits all solution for every business facing unmanageable debt. Ondeck and other settlement services provide a lifeline for business owners drowning in debt. But tax, legal and credit implications should be carefully weighed before proceeding.Thoroughly discuss options during your free case assessment to determine if a debt relief and settlement program could be right for your situation. Having a customized plan to resolve debts you are unable to pay allows you to focus energy on business growth and financial stability.