Making Sure Your Business Survives through Its Debt Crisis

Making Sure Your Business Survives through Its Debt Crisis

As a small business owner, you may be going through the same ordeal that numerous others are experiencing: overwhelming debt. One of the main options owners of small businesses use to deal with the debt crisis is filing for bankruptcy; a very costly move indeed. In addition to costing thousands of dollars, it also leaves your personal and business credit in ruins.

Fortunately, there are a number of actions you can take to save your small business from crushing debt before you consider filing for bankruptcy.

Restructure your business budget

The first step to digging your way out of enormous business debt is identifying unnecessary business expenses and cutting them out to free up cash. If you have equipment that has gone unused for months, consider selling it.

The current poor condition of your business’ financial health is an indicator that your current budget is ineffective. Review your business budget and make changes based on the current financial position of your business. Set aside a portion of your revenue to cover fixed costs, such as rent, insurance, utilities, etc., and high-priority variable costs. Use the portion left to pay down your debt.

Use accounting software such as QuickBooks, Peachtree, Netbooks, etc. to manage your budget and automate a number of the tasks that go with it.

Prioritize your debt payments

List all your business debts and arrange them in order from the highest to the lowest priority. Then start paying down the high-priority debts first. Secured business loans – loans which you backed using personal assets or you had a friend or relative cosign – should be at the top of the priority list. The same goes for debts with the highest interest rates.

Negotiate with your creditors

Speak with your creditors. Inform them of the current financial position of your business and negotiate for an adjustment in your payment schedule. Make it clear that this would improve your ability to make payments and reduce the likelihood of missed payments. If they agree, make sure that you strictly adhere to the new payment plan.

Making such negotiations will not be easy for two reasons. One, you have little experience negotiating with creditors. Two, you are not likely to be effective because you are stressed out and might be feeling desperate. That is why it is always a good idea to seek the services of a professional debt settlement firm.

In addition to being highly experienced in working with a lot of clients, they will also be objective and therefore in a position to make better decisions regarding your creditor’s relief.


Dealing with enormous business debt is not easy. It is a highly stressful experience. Furthermore, you have to spend a lot of time reviewing your books and negotiating with creditors, time spent away from your core business. As a business owner, you end up getting into a vicious cycle.

The best decision you can make in such a situation is to seek the help of professionals to guide you through the process of getting out of the burdensome debt crisis you found yourself in.

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