Businesses get in over their head for a lot of reasons. It doesn’t matter how it happened, but you need to know how to negotiate with your creditors if you find yourself with too much debt.
Having a plan is crucial. The first step is to put together a manageable monthly budget. Remember, your goal is to lower your loan balance, receive a break on your interest rate, or push out your payment schedule. You might be able to accomplish all three, but you need to figure out what helps you the most.
Then, you are ready to contact your creditors. Try to do this in a systematic and organized way. You can make a list of all your creditors, going from your largest balance down to your lowest. Start with the most urgent creditors you need to pay in order to keep your business running is another approach. This might include the ones threatening to shut off service.
You can try to negotiate with your lenders on your own. People are shy about asking for a break, but many creditors want to work with you. The key is being upfront and honest about your situation. Of course, get your contact’s name and information, including their title. Once you reach an agreement, it is a good idea to put it in writing. You can even do this with an e-mail, which creates a paper trail.
There are debt management companies that negotiate for you. You could either pay an hourly rate, a fixed fee, or a percentage of the payments. Make sure to understand the fee structure before you sign on.
You want to settle with your lenders quickly. Working something out with your creditors allows you to put all your focus back on your business.