In case your start-up firm or small business is currently struggling to meet obligations, then you might be tempted by solicitations willing to settle the debt for you and in lower percentage. Well, you aren’t alone in such a scenario. Each year, around thousands of owners of small businesses will find them in such desperate conditions. There are some legitimate methods available of debt relief, which is used for helping small businesses to survive. But, the market is full of relief scammers too, whose main aim is to leave small businesses in the worst shape possible. They can further scar any reputable lending industry’s name. So before taking any decision, you might want to check out the deals first and evaluate the relief options.
Try managing cash flow:
The primary step for smaller businesses to take when they are struggling with debt is to improve current operations. After improving current cash flow, multiple small businesses can trim multiple dollars off bottom line every month by just taking closer look at expenses.
- Have to be more frugal:
It is as simple as that; save money and you can help your business enjoy some benefits. By making some smaller changes like keeping expenses to minimum, you can easily protect bottom line and avoid spending more than what you have been doing right now. You can try to follow the paperless medium by using software and some free apps to cover major parts of your business with ease and a lot faster than before. For advertisement purpose, you can use social media by spending few amounts. You can further keep offices at home.
- Try lightening your overhead:
It is mandatory for the smaller firms to review expenses on quarterly basis minimum. You need to print accounts payable list for see those whom you have paid and on what basis. Is your payment vital for business sustainability? You have to take some time in reviewing credit card statements too. Sometimes, small businesses can sign for recurring services even when they don’t need it. Try avoiding those expenses and pay only for necessities. Along with that, as payroll is the biggest expense for smaller firms, you have to evaluate staff needs too.
- Avoid stacking at any form:
Accepting multiple loans for funding daily business operation is described as stacking. Small businesses will often lure into stacking for a quick fix, but will end up drowning deep in debts, in the months to come. So, it is always mandatory to not add more debts even before you get to resolve the old ones.
Some points to note down:
Well, people actually make this mistake of confusing debt consolidation with debt settlement or relief, which mainly involves paying creditors a huge sum, lower than total amount owe. Yes, this debt relief option might sound a lot better but it comes with some risks to consider first.
- If you are late, you will be in trouble: Majority of debt relief firms will ask you to stop repaying to increase bargaining power with debtors. Now, the issue over here is that, not paying bills will offset any kind of savings, which the company has achieved so far on settled debt.
- End up with expensive fees and no guarantee: There is no guarantee that the debt settlement will take place as not all lenders are willing to settle for an amount less than what they paid you on the first place. Some of them even want to work directly with you. Along with that, there are multiple debt relief companies, which will ask you for payment up front even before conducting any work.
- Trouble is here to stay: Along with penalty interest and late fees, you might be asking for debt collection lawsuits, which will impact credit score significantly. It can further lead to seizure of you assets if you have anything under collateral security. It can further add tax consequences if the creditor forgives your debt, as it might be counted as taxable income.
Try spotting out some debt relief scams:
Right now, even after trying hard, small business related debt settlement scams are on the rise. Many small business owners are trapped into the jungle of scam companies, who claim to reduce short term debt by around 75% within a time span of 48 hours. They don’t even realize that they are scammed until the matter gets out of hand. Scammers will further make no effort to even negotiate with lenders or will never try to make any kind of payment. That will force small businesses to end up in loan default, which they might have renegotiated if given the chance.
- After checking out on the scamming companies, some studies have clarified that less than 10% clients of these firms receive any services for which they have invested some money. Instead, they find themselves saddled with lawsuits, made credit score and more debt than before.
- The problem grew to such a large extent that government implemented some new rules for these debt settlement or relief companies, which they should follow if willing to cover the task in the legalized and proper manner.
- You always have to be wary about doing business with any firm, which is charging fees before settling debt or represents that it might be able to settle debt for promised percentage reduction.
- You need to keep your hands off those companies, which tout new programs for bailing small businesses or guarantee to remove debt for good within a short notice period.
- If the companies urge you to stop communicating with creditors or even stop all kinds of debt collection laws and legal suits, then something is wrong with the firm. If they even ask you to have third party bank account, then you have come in touch with a scammed individual.
Yes, debt relief companies can easily offer you with relief but only when you have chosen the best ad reputed name in the market. It might take some time but never lose hope. In the end, debt settlement firms will come to the rescue!
August 1, 2018