Business Debt Settlement
Business debt settlement for small and medium size businesses facing financial hardship and in need of relief.
It is common for a business to borrow some quantity of debt. Whether it be unsecured credit card debt, unsecured debt owed to vendors, secured debt owed to a bank, merchant cash advances, IRS payroll debt, some form of landlord debt or leasing debt…the various types of business debt take on many forms. And, just as in the case of the consumer, a business can fall into the position of becoming saddled with overly burdensome debt.
It happens. Business conditions change, a new competitor emerges, product obsolescence strikes – whatever the case may be – and suddenly a previously thriving business owner finds himself in the unenviable situation of struggling to keep pace with timely debt payments while fighting hard to turn around a sinking business. However, also as in the case of the individual consumer, pursuing business debt settlement on onerous business debts can represent a viable solution.
What is Business Debt Settlement?
Business debt settlement is the process of successfully negotiating and settling business accounts for lower payoff amounts than the total balance owed on them. These lower amounts are agreed to by the creditor or collection agency and are fully documented in writing. Terms are often settled in the form of a lump sum payment, though there also are instances – depending on the lender and the circumstances involved – in which a reduced payoff amount can be paid off over an extended period of time.
The amount of business debt reduction achieved through settlement will depend upon a number of factors – among them being the types of business debt involved, who the creditors are, the overall amounts owed, the value of underlying business assets, and, in some instances – the value of personal assets. Nonetheless, the process of negotiating and paying lower amounts to settle business debt is actually far more common than many business owners realize.
However, if your business has already fallen behind on payments by four or five months and there still isn’t much light showing at the end of the tunnel – or you’ve already closed or are in the process of closing, then there is less to think about. Debt settlement could easily represent the right choice. Check out our free business debt calculator on United Settlement and see how much you can save.
The First Question
The first question is the most important one. Is your business staying open – or has your business already closed or begun the process of shutting down? The answer to this first question will dictate to a significant extent the course of your business debt settlement process, as any eventual settlement is likely to impact your business’ credit profile and land on your business’ Dun & Bradstreet listing. This can deter vendors and suppliers from taking a risk on you in the future.
Therefore, if you haven’t yet begun the process of closing your business and are merely caught in a rough patch, you will want to make strategic considerations as to which debts to pursue settlement on. However, if you have already closed or are in the process of shutting down, you’ll want to pursue an exit strategy that involves the minimum amount of financial damage.
Many small business loans and other forms of business debt come with personal guarantees attached to the debt, meaning that the personal assets of the business owner become at risk in the event of default. Additionally, when a business owner provides a personal social security number when initially pursuing the debt, it will often result in a personal guarantee being attached to the debt.
Lenders such as Wells Fargo, Chase, Capital One and American Express commonly include personal guarantees with their forms of business debt. Many merchant cash advance and unsecured debt providers such as OnDeck, CAN Capital, Quarterspot, BizFi, Kabbage, Everest, and LoanMe often attach personal guarantees as well.
Even in situations that don’t involve personal guarantees, there will often be a lien attached to property, machinery, or inventory of the underlying business that is necessary to the continued functioning of the business. In situations such as these in which a business owner also wishes to remain open, it becomes critically important to successfully pursue business debt settlement when making continued timely payments on the debt has become too difficult.
The good news is that after a settlement agreement is reached in writing and eventually paid – the business, its guarantors and any liens attached to personal assets or business get released. The business and business owner become free to get back on firm footing without the looming strain of debt collection efforts from creditors.
Don't Pursue Business Debt Settlement Too Soon
A basic fundamental to debt settlement is that creditors won’t show a willingness to settle until a business has already demonstrated an inability to pay. If your business has merely fallen behind on payments temporarily as a result of a relatively brief rough patch, then the debt settlement process might not yet be your best option, given it’s irreversible quality once it has begun and the negative consequences that settlement can have on your business’ credit profile.
However, if your business has already fallen behind on payments by four or five months and there still isn’t much light showing at the end of the tunnel – or you’ve already closed or are in the process of closing, then there is less to think about. Debt settlement could easily represent the right choice.
The idea of being able to settle for pennies on the dollar with your business debt is, these days, more a myth than anything else. Back in the days of the Great Recession following the Global Financial Crisis, this was more of a reality. But unless you’re an older person living on a fixed income, you’ll need to temper your expectations, as these types of outcomes are no longer a common occurrence.
You’ve got to be realistic and maintain a proper sense of what financial resources are currently available to you and at what level lenders are likely to settle. Though lenders are under no legal obligation to accept business debt settlement offers, it is not uncommon for a reputable settlement company to achieve business debt settlement savings approaching 50% or more of the aggregate debt balance.
Are you in debt? we can help
- Business Debt Relief
- Small Business Debt Relief
- Business Credit Scores
- Business Bankruptcy Alternatives
- Free Business Debt Calculator
- Results, Debt Settlement Letters
- Business Debt Restructuring
- CAN Capital
- American Express
- What is An Unsecured Business Loan?
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United Settlement and Business Debt Settlement
At United Settlement, our experienced debt settlement professionals enjoy strong relationships with many of the leading providers of business debt and possess a broad understanding of the overall business lending landscape. If you and your business are currently burdened by high levels of business debt, the process of pursuing debt settlement could easily make sense.
We have a proven strategy in place for achieving successful business debt settlements for our clients. Together we can discuss the appropriate financial specifics related to your business and its debt, and determine whether the process of pursuing business debt settlement is right for you.