Debt is inevitable in business as funding is required from time to time. Though it is common for companies to acquire some debts, problems arise when it becomes unmanageable. If handled responsibly, the debt may function as an impetus towards expansion and growth of the business by serving as a crucial economic engine. However, debt management is an art which you need to master to become a good business administrator.
The wrong side of debt
Given today’s economy, it is easy to fall into a debt trap. Both individuals and businesses rely heavily on credit, which leads to poor financial choices. Many business owners often lose track of where the money is going, and a mismanagement of finances leads to chaos, and sometimes, ultimate breakdown.
Fortunately, there are ways to deal with debts in a more focused manner. You can do it on your own with persistent efforts, but it is advisable to seek the help of the skilled financial consultants or organizations that can negotiate lower rates and also find the most appropriate consolidation and debt relief avenues for you.
Two of the major business debt relief programs are:
- Credit counseling
- Debt consolidation
Let us further look into these solutions and the pros and cons of each.
It is mostly working with some non-profit credit counseling agencies which put forth various debt relief options. They will help to review your business budget, evaluate the alternatives and suggest the most feasible solutions.
- Counseling is free. However, you need to check it beforehand as some agencies may charge a minimal fee.
- The service that recognized credit counselors offer is more professional and structured.
- Professional credit counseling agencies do not promise to provide some quick-fix solutions. It will require various sessions for them to assess your case and come up with feasible solutions.
- Not all credit counseling agencies deliver what they promise. So, do intense research before choosing any agency.
- You need to be flexible as most of the advice you get from them may not be what you wanted to hear. An ideal counselor evaluates your current scenario, resources, and goals to suggest a plan.
It is one of the most practical options for debt relief. Here, you take one large longer-term loan to pay off all the existing unsecured debts. Ideally, you get a reduced interest rate and longer repayment period to manage your monthly payments better and get rid off debts over time.
- There is a high competition in this field, and you can find a lot of options available. Check for lower interest rate and ensure there are no other hidden charges.
- The providers are experts in this field, and they can provide you the lowest possible monthly payment plans. They also know how to negotiate with the lenders to get rid of the existing loans more effectively.
- You need to be qualified. Not everyone may be able to avail debt consolidation loans, especially if your credit score is too low.
- There is a fee involved. Always read the fine prints. There may be hidden charges or some restrictions which may negate your other advantages.
In any case, you need to take a well thought out decision while choosing a debt relief plan. If administered appropriately, it can surely help you get rid of your troublesome debts and get you back on the right financial track.
Author Bio: Peter Cook is a certified credit counselor, working with various agencies as a professional service provider. He also used to write blog articles about credit, debt, debt relief, and various business debt management practices.