Government and Non-Profit Programs Offer Hope for Struggling Businesses

Running a small business or non-profit can be extremely rewarding. You get to pursue your passion, help the community, and be your own boss. However, it also comes with financial challenges that can feel overwhelming at times. Many business owners have found themselves facing serious cash flow issues and even the threat of bankruptcy, especially in economic downturns like the Great Recession or the COVID-19 pandemic.

Fortunately, there are government and non-profit programs that can provide real debt relief and give struggling businesses a fighting chance at survival. This article will explore some of the main options available.

Non-Profit Credit Counseling

Non-profit credit counseling organizations like InCharge Debt Solutions offer customized debt management programs to help businesses and individuals get out of debt. They provide financial education, budgeting help, and negotiate with your creditors to lower interest rates and create affordable payment plans.

The services are very affordable, often charging only a small setup fee of $50 or less and then $25-50 per month for ongoing account maintenance. This can save you thousands in interest payments over time. Counselors take an empathetic approach and truly want to find the optimal solution for your unique situation.

Non-profits like InCharge are accredited by third parties like the International Standards Organization (ISO) to ensure they meet strict quality and ethics rules. They must file detailed paperwork with state regulators as well showing their nonprofit status, services, fees charged, and compliance with telemarketing rules.

Debt management programs are not quick fixes but they can eliminate or drastically reduce interest charges and penalty fees. This frees up cash flow to keep your business going while gradually paying down principal. In some cases, creditors may agree to partial debt forgiveness.

The key is being transparent about your financials and working cooperatively – not hiding from creditors or stopping payments altogether. Non-profit counselors can guide you through the process.

Government Grants

Several government agencies including the Small Business Administration (SBA) and state/local programs offer grants to help small businesses grow or recover from disasters and downturns.

These are not loans that need to be repaid; they are free money awarded based on need, specific programs, and availability of funds. Amounts can range from several thousand to over $100k.

For example, the SBA’s Economic Injury Disaster Loan (EIDL) program provided vital support to businesses slammed by COVID shutdowns. Over $360 billion in emergency EIDL advances and low-interest loans were distributed.

Other SBA options like the 7(a) loan guarantee program can back bank loans up to $5 million for working capital, equipment, or commercial real estate. Interest rates are capped and terms can reach 25 years.

Grants don’t have to be repaid but they do come with stipulations like requiring you to remain operational for a set time period, document job creation/retention, or only use funds for approved purposes like renovations or new equipment.

Federal & State Tax Relief

Federal and state governments have implemented various tax relief measures during crisis periods that struggling businesses can utilize.

For example, the IRS allowed businesses to defer payroll tax payments for over a year during the pandemic. The American Rescue Plan Act also created the Employee Retention Tax Credit which enabled hard-hit companies to claim refundable credits worth thousands per employee.

State programs added additional tax filing extensions, penalty waivers, and other benefits. California let struggling businesses convert certain tax liabilities into no-interest payment plans under its Managed Audit Program.

While tax breaks alone may not solve all your problems, they provide vital cash flow relief and give you more time to pay what you owe. Every dollar counts when trying to save a distressed business.

Bankruptcy As A Last Resort

If all else fails, small business bankruptcy may be an option to restructure unsustainable debts and get creditor harassment to stop. This gives you breathing room to fix operational issues and revive sales.

However, bankruptcy is not be taken lightly given the negative impact on your business reputation and personal credit scores. Legal fees and court-appointed trustees can also eat into assets available for recovery.

Still, Chapter 11 bankruptcy done properly can help save viable businesses worth preserving. Owners often retain control and write off large amounts of debt they cannot reasonably pay back. The business can then emerge leaner and more competitive after slashing expenses and crafting a court-approved reorganization plan.

Non-profit credit counselors can advise if bankruptcy makes sense or not. They may negotiate deals with creditors to make it unnecessary. It’s smart to consult both financial and legal experts before making this big leap.

Beware Of Debt Relief Scams

While government and non-profit programs provide legitimate help, struggling business owners can also become targets for predatory debt relief scams. Watch out for too-good-to-be-true guarantees and high-pressure sales tactics.

The Federal Trade Commission warns of these red flags:

• Touting “new government programs” that don’t really exist
• Guaranteeing ability to make debts “go away” no matter how severe
• Advising you to stop communicating with creditors
• Claiming power to stop all collection calls/lawsuits
• Offering to settle debts for “pennies on the dollar”

No legitimate organization will enroll you without first reviewing your full financials. Nor will they make unrealistic promises or tell you to cut off creditors.

Stick to reputable non-profits or government agencies instead of shady companies you find through late-night TV ads or online pop-ups. Transparency about your situation is vital.

There Is Hope

The old saying about small business success is true – “cash is king”. When cash flow stalls, it can create a dangerous downward spiral. Bills pile up, creditors close in, and bankruptcy can begin to seem inevitable.

Yet there are always options, even in the darkest moments. Government and non-profit relief programs throw out lifelines if you’re willing to put in the hard work to fix underlying issues. They won’t rescue businesses that are fundamentally unviable but many can be revived and thrive again.

Most importantly, don’t struggle alone in silence out of fear or embarrassment. The experts at non-profit credit counseling agencies have literally helped thousands of business owners find solutions and avoid bankruptcy. They offer judgement-free support and can point you to resources like grants, tax breaks and other assistance.

So if your business is facing cash crunches, don’t despair. Reach out for help and focus on pragmatic solutions. You can likely keep the dream alive.