Getting your business off the ground can be equal parts exhilarating and stress inducing, particularly when you think about how much business debt you might rack up to get things going. Even if you socked away money to fund your new enterprise, you might not have a sufficient amount to cover everything. While funding a business is considered good debt, you are still paying interest and adding to your debt burden.
But when your business debt ceases to help your business, it can turn into a problem that hampers your success. In this case, a business loan may be what you need to get back on solid financial footing.
What Types Of Business Debt Might I Accrue?
First, there’s debt from startup costs. When you’re just starting out, there can seem to be no end to necessary expenses. And it doesn’t help that you’re not bringing in an income yet. If you don’t have enough money saved to cover all expenses?and most people don’t?you’ll end up taking out a loan.
You might also incur debt to support your company’s growth. If you don’t have investors, coming up with the funds is up to you. Even ?good debt? can get out of control, resulting in a vicious cycle of more and more borrowing.
Moreover, if your industry has an annual down season, which many industries do, you may have to borrow funds to cover operating costs during that time. Let’s face it, things don’t always go according to plan. If you’re forced to close your business even after putting in your best effort, you are ultimately responsible for paying back the loans.
Options For Business Debt Relief
Your business debt may seem manageable at first when it’s sized up against the prospective success of your company. But things can get out of hand, particularly when you start missing payments. In this instance, paying off your debt should become your top priority.
Business debt relief can help you pay off your debt for less than you owe.
- Business Debt Consolidation. Business debt consolidation involves taking out a debt consolidation loan to combine all your balances from various lenders into a single fixed payment. Ultimately, you’ll save money with a lower interest rate and the avoidance of overdrafts and late fees. You’ll also save time not having to juggle multiple loans with multiple lenders and interest rates.
- Business Hardship Loan. Also known as a business rescue loan, this option targets small businesses that are struggling to stay afloat. Offered through the Small Business Association, a hardship loan can provide up to $35,000 interest free to help you with your business obligations and ongoing expenses. Loan repayment is typically deferred for a year, although that can depend on variables like the company’s age.
- Hardship Payment Plan. If you’ve fallen behind on payments and you are trying to catch up, a creditor may be open to working with you to develop a hardship payment plan. The goal is to reduce your monthly payments so that you can remain current with your debt.
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