Bad Business Debts – Alternatives to Funding Business, the Traditional Way
As we talk about dealing with bad business debts, lets also study the link between your business and personal debts. Business debts for a small business can also be personal debts for the owner of the business. And a major portion of these bad debts comes from credit cards. If you do not keep separate funding for business and personal use, dealing with bad business debts can be really tough. Because even if your personal credit score is bad but your business is promising, the doors of financiers are open for you. On the contrary, if your business is under a debt crunch, you'll have to look beyond the traditional money lenders to keep your business running.
The best method is to keep your credit cards away from your business unless absolutely required. While speaking of business credit score, you need to know that approaching different agencies to get loans will further ruin your business credit score. As more and more agencies make enquiries on your credit status, your credit score goes down by a significant rate. This is not applicable if you are checking out your credit score.
There are ways where you need not approach the traditional money lenders and banks. However, these are not always successful if your monetary needs are high. Among the alternatives for traditional loans are:
1. Checking out family and friends. Many of them may be willing to help you.
2. If you have a sound plan in place, you can show it to any person who has money but is not sure where to invest. You can find such people through share market agents.
3. Go for high interest loans, available through private lenders.
4. Check out different grants available.
IMP: Loan Settlements are NOT Recommended for Long Term Business.
Sometimes it may seem that negotiating and closing a debt with a settlement is the best idea. Many banks and lenders, who feel that your business may not be able to return the entire money taken as debt, will consider your application for debt settlement at a negotiated price. You may get out of debt this way but the settlement becomes a permanent mark on your FICO report. I would not recommend this method for dealing with bad business debts.