Business debt is common amongst thousands of businesses throughout the United Kingdom, so if your business is struggling financially, don’t worry; help is available.
If you’re seeking help for your debt problems, there are some simple steps that you can take first.
Getting Business Debt Help
First and foremost, do the following:
- Work Out Debt. Gather together your financial information and work out your total debt.
- Calculate Possible Repayments. Based on your incoming and outgoing finances, calculate how much you can afford to repay each month.
- Contact Your Creditors. Your creditors want to see their loans repaid, so being proactive with your debt problems and negotiating a repayment plan will show signs that you are serious and keen to clear your debts.
- Prioritise Your Debt Repayments. Pay off the most important debts first, such as rent or utility bills.
Areas for Consideration
There are some issues that you should be aware of when you’re looking into paying off your business debt.
Many organisations will appear as though they’re trying to help you to solve your debt problems, but will actually lead you into larger, more long-term debt problems.
- Be careful who you deal with. You should be wary when dealing with certain loan companies that offer debt consolidation loans. These loans will sometimes result in you paying more in total through interest payments.
- Steer clear of illegal loan sharks. Many illegal loan sharks operate by preying on people with severe debt trouble and appearing to be the only option available. These loan sharks are not licensed to lend money and use extortionate levels of interest rates. In addition, if you default on any repayments, you may be exposed to severe intimidation. The Consumer Credit Register lists all the licensed lenders, so if you’re unsure, be sure to check there first.
- Check credentials. Before you get in contact with an organisation, be sure to check their credentials first.
Negotiating Your Debt Repayments
Creditors tend to be feared more than they should be. Good communication with your creditors will do a lot more good than harm. If you contact your creditors and explain that you’re having difficulties in making the level of payments, they’re often willing to negotiate a deal that suits both parties.
Restructuring your debt may require you to consolidate several of your debts into one debt, freezing interest payments for a set period, offering security against the debt, such as a mortgage.