At one point of the other, a business owner has to settle on the decision to seek financial help from different places. It may be the bank or an investor who may want to buy shares into your company. The most trying experience is when your company is sinking in debt. Keeping the company running relies on its financial stability. The employees have to be paid and other running costs have to be settled.
The priority is to get out of debt and in the fastest way possible. There are many ways to do it but it takes the right steps to achieve debt freedom.
Stop Borrowing
The reason you are in debt in the first place is because you borrowed money you are unable to pay. The best way is to cut on the running costs of the company and balance the money coming in and going out. This you can do by selling off some of the company assets and equipment that are not in use. At some point, letting some of the employees go may be the best option to keep the business alive.
Keep in Touch with your Creditors
If you are unable to pay your creditors, contact them and let them know the predicament you are. If you ignore them they will be less lenient when collecting the debt and a solution will not arise from the situation. Ask them to increase your credit duration and lower the interest rates if possible.
If keeping in touch with them proves to be challenging, you can always hire a debt relief company to help you make agreements with the creditors.
Consolidate Loans
It is easier to combine all your debts into one single amount. It will help when making monthly payments. The loan can help you pay off one debtor instead of dealing with multiple creditors which can be hectic. The loan is made easier by a debt consolidating company and can be secured or unsecured with company assets.
Filing for Bankruptcy
As a last resort, you can salvage your company by filing for bankruptcy. This applies if the company’s debt situation is not permanent and can be resolved. The down side is that the process requires a bankruptcy attorney which can be costly. It also depends on the worth of the company assets. If the assets are worth less than the owed amount, then you can pay what the assets are worth and not the entire balance.
Selling the Business
If your business is not in a good situation and is likely to collapse, you can sell it to a buyer to pay off the lenders instead of selling the company assets. The sale may also free you from any future liabilities if you are unable to pay the lenders. The sale will be successful depending on the ratio of assets to debts. A high debt compared to the assets makes the company hard to sell.
Alternatively, you can liquidate the company assets and negotiate with the lenders. They are likely to agree since litigation is expensive and filing for bankruptcy means they get an even lower amount.
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