Small business tactics – What leads to small business debt and how to get out of it?

Posted on by biJay345

Small business can get into debt, easily. This is because, small businesses in general, have cash issues. They may not always be able to get the required cash soon enough. Thus, this leads the businesses into debt. Moreover, there can be different other situations, under which the small businesses can fall deep into debt. However, if you can fall into debt, there can also be way out of it. You can not only try to solve the business debt issues of your own, but you can also take the help of the debt relief companies or may be the business debt consolidators or debt negotiators.

How do small businesses fall into debt?

There are various situations under which, the small businesses can fall into debt. Some of these are:

  • Business borrowing, for example like those of the overdraft fees, vehicle financing and so on
  • Business liabilities which your business may owe to the HMRC for PAYE, as VAT and also Corporation Tax
  • Due to loss of money which was invested in the business, by the directors or other investors and also by you. These, in general are done in the usually in the form of cash, or the personal loans, or also as the personal guarantees
  • Credit which was provided by the suppliers or through the factoring or the invoice discounting programs
  • Due to uneven and dis-balanced cash flow, with regards to the small business transactions

How can small businesses get out of debt?

There are different ways, in which you may be able to pay down your business debts. The different options are the likes of:

Debt settlement lowers your debt amount. You can either do it yourself or take the help of a debt settlement company. They will try to reduce your outstanding debt amount. Debt settlement lowers the outstanding debt amount by 40% to 60%. With settlement you will be able to make lower monthly payments.

Debt consolidation consolidates your multiple debts into a single new loan, with a lower interest rate. Your loan term too becomes longer. You can also transfer the balances form high interest cards to one with low interest. Debt consolidation too can be done on your own. If you can’t seem to do that on your own, you can get help of a debt consolidation company.

Another credit card debt help that can help you to get out of your credit card debt is the Debt management Plan. The credit counselor will advise will analyze your financial situation and prepare a financial budget for you, so that you can save more, to pay off your debts faster. The counselor will also talk to your creditors and negotiate payment plans on your behalf, to reduce the outstanding debt amount and to waive off late payment penalties.

You can talk to your creditors about your financial situation and that you want to make the payments. Request them to agree to a repayment plan. Get the repayment agreement in writing.

Other than trying out the different debt relief options, you can also try to get the government grants which are available for the betterment of the businesses.

Find the government grants for businesses

You can get the details from the government grants from the different advertisements made by the government and also the Internet. However, even before you start researching for the government grant with the specific need for paying down your debts, you need to know that there aren’t any grants which are offered especially for the purpose of paying down your business debts. So, while talking to any official or researching for the grants online, never make the mistake of asking for any debt pay off grants.

Tips on getting the government grants

  1. Government grants do not require you to pay fees – Government offices do not require you to make any payments as grants. However, you will be required to provide your financial information.
  2. Government does not require you to send any letters – Government will never try to contact you in person in order to offer you the grants. So, if anybody calls you for making any such offers, know that it’s a scam.
  3. Government grants are provided for specific purposes – In general, the government grants are provided through the states and the cities. The business grants are mainly provided for the purpose of handling the business expenses and things related to that.

However, in order to get the business government grants, you will have to fill up the documents and applications and also check out if you can meet the required criteria.

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