Expert Interviews About Business Debt Relief

Business debt can feel overwhelming. As an entrepreneur or small business owner, you may have racked up significant debts through business loans, credit cards, and other financing options. While debt is often a necessity in order to grow a business, too much debt can become unmanageable and put your business at risk.

In this article, we’ll share insights from financial experts on strategies for dealing with business debt. Getting out from under a mountain of debt may seem impossible, but with the right approach, you can find a path forward.

Negotiating with Lenders

If your business is facing cash flow issues but is otherwise viable, you may be able to negotiate temporary relief from lenders without damaging your credit. According to CNBC finance expert Farnoosh Torabi:

“Contact all lenders and explain the situation. Ask for reduced or delayed payments for a few months until business picks back up. Most lenders would rather do this than lose your business. Be proactive before you miss payments.”

Torabi also advises negotiating late fees:

“If you do miss payments, call immediately to ask for late fees to be waived. Lenders often will grant a one-time courtesy waiver.”

The key is communicating early and maintaining positive relationships with lenders. Debt management coach Dave Ramsey emphasizes that lenders want to get paid:

“Keep the lines of communication open. When lenders see you’re acting in good faith to eventually repay, they’ll be more flexible.”

Seeking Legal Protection

If negotiations with lenders fail, small business owners do have certain legal protections. Michelle Cagan explains:

“Under the Fair Debt Collection Practices Act, debt collectors are prohibited from making threats, using profanity, calling outside specific hours, or making false statements.”

Cagan adds that the law also provides recourse if collectors cross the line:

“You can sue for damages and the collector may have to pay your legal fees. This gives you leverage in negotiations.”

For more severe cash flow problems, Chapter 11 bankruptcy allows restructuring debts while continuing business operations. Erica Sandberg, a consumer finance expert, describes the process:

“The court appoints a trustee who works with creditors on a repayment plan. This stops collections and lawsuits while giving you time to get back on sound financial footing.”

Sandberg notes that Chapter 11 bankruptcy remains on a business’s credit record for ten years. But it can be a lifeline for an otherwise successful company facing temporary setbacks.

Best Practices to Avoid Excessive Debt

While the focus here is on addressing existing debt, it’s equally important to avoid repeating the cycle of over-borrowing. What steps can business owners take to keep debt under control going forward?

Joe Bailey emphasizes the need for professional support:

“Having a qualified accountant and financial advisor helps enormously with cash flow planning. Their outside expertise provides helpful perspective.”

Bailey also advises caution when financing growth:

“Only take on new debt if you have a high degree of confidence it can be repaid on schedule. Prioritize slow, organic growth over rapid expansion using debt.”

Erica Sandberg stresses diligent tracking of expenses:

“Use accounting software and review reports monthly. Identify unnecessary costs that can be cut back or eliminated. Even small savings add up over time.”

Finally, Farnoosh Torabi recommends being leery of “easy money”:

“When lenders come knocking with offers of financing, that’s a red flag. Good deals won’t be pushed on you. Seek financing only when truly needed based on careful planning.”

With discipline, expert support, and caution about over-borrowing, small business owners can avoid the pain of excessive debt and achieve sustainable growth. There are always options for relief even in difficult situations. But an ounce of prevention is truly worth a pound of cure when it comes to business debt management.