Small Business Debt Relief

There are two general categories of business loans – secured and unsecured. In the case of secured business loans, a small business borrower will post a specific piece of collateral in the form of a valuable asset – including real estate, inventory, or manufacturing equipment – that a lender can potentially seize (and sell) in the event of non-repayment. With unsecured business loans, borrowers do not put up collateral, but in order to mitigate the risk associated with them, lenders attach higher interest rates to unsecured business loans.

Revolving debt consists of open-ended accounts, usually with variable interest rates and established credit limits that require monthly payments as a percentage of the outstanding balance. Though such a credit line provides access to capital, the funds take the form of a liability that actually deducts from working capital, which is defined as current assets minus current liabilities.

The typical interest rate for a small business borrower will depend upon a variety of factors including the borrower’s qualifications, the type of loan, and the lender. Small business loans from traditional lenders, such as banks and credit unions, can come with interest rates as low as 4% in the best cases, ranging up toward 13%. For non-traditional online lenders, the best small business loan interest rate will be closer to 7%.

Penalty APR is typically applied for six months and often is significantly higher than the previous interest rate. Avoiding Penalty APR is yet another reason to consistently pay credit card bills in a timely manner.

There are a few ways to start a business debt free. One way is to bootstrap your business, meaning you use your own money to get started. Another way is to find a partner who can invest in your business and share the financial responsibility. Finally, you can look for funding from grants or loans from banks or other institutions. Whichever route you choose, make sure you have a solid business plan in place to help you stay on track financially.

There is no simple answer to this question as it depends on the specific situation. In general, however, business debt may affect personal debt in a few ways. For example, if a business is not doing well and is unable to pay its debts, this may have a negative effect on the personal finances of the owners or shareholders. Additionally, if a person has guaranteed a loan for a business or is personally liable for business debts, this may also negatively impact their personal finances. Finally, certain business structures, such as LLCs, offer protection from personal liability for business debts, which can help shield individual owners from potential personal financial repercussions.