Business Debt Solutions – How to Negotiate and Eliminate Business Debt

Most businesses need loans and cash infusions to start, grow or re-energize during difficult times. However, business debt should always be used sparingly and with the intent of growing the business and making it profitable or self sustaining as quickly as possible to avoid any debt issues later on. Whether a business is in trouble or experiencing rapid growth, it is important to be aware of all the options available to manage a business’s debt situation including negotiation with creditors and other lenders to reduce expenses and/or debt payments.

In many cases, debt negotiations can be successful. Business business debt solution debt solutions may involve lowering interest rates, reducing principal amounts owed, deferring or forgiving arrears and/or extending payment terms on debts or obligations. These negotiations can have several benefits: the business saves money by spending less on interest and fees; it preserves the reputation of the company with its creditor for a more positive future; it allows the company to continue operations without having to liquidate assets in order to pay the debts; it frees up cash that could be used for other purposes; it may allow the owner to exit a failing business with minimal personal repercussions; it may give the business more time to recover from financial difficulty; it can allow a more flexible repayment schedule.

Some companies with high levels of debt are unable to obtain new loans or have their loan applications denied due to strict borrowing limits and higher interest rates. This can make it very difficult to sustain a business or even grow. In such instances, it might be necessary to seek alternative financing. This can be accomplished by factoring receivables, obtaining asset-based lending or merchant cash advances.

Another alternative is to consolidate existing debt. This is often accomplished by rolling multiple business loans into one consolidated debt and possibly obtaining a lower rate for the new loan. The business may save on interest fees and can use the savings to pay down debt faster, which will have a positive impact on the credit score.

Bankruptcy is a last resort but may be an option for a business with unsupportable debt, especially if the company can continue to operate and does not have significant personal guaranties attached to its debt. The bankruptcy process offers the opportunity to settle the unsupportable debt and avoid having to take the risk of putting up its assets for auction and losing the value. Employees and the local economy win as well, since the debt is not unnecessarily thrown away.

The ultimate goal with any business debt solution is to save the company and settle the outstanding debts. This can be achieved through negotiating with creditors or with professional debt-relief firms that negotiate with creditors on behalf of the client to settle business debts for less than they are owed. The latter approach is usually preferred as it does not disrupt the natural order of priority of a creditor’s rights and also saves time, expense and resources for all parties involved.