The Debt Workout

Everything can be worked out. Everything. You CAN reduce your overall debt which will dramatically lower your monthly payments. This can be done with a business debt workout.

Decreasing revenues, increasing overhead, pinched profit margins, changing customer habits and fierce competition – all of this means supporting yesterday’s loans on today’s cash flow. In a word: impossible.

The workout must be done, as it is simply impossible for small business to be able to service debt taken when the business was doing 20-50% more revenue when it took on the debt than it has now, due to the economic downturn or for whatever other reason.

If you can’t afford to pay your current monthly debt payments you will end up in liquidation left with no options other than self-destruction.

If you see this train wreck coming, implement your debt workouts as soon as possible. You are wasting important resources and getting weaker every day. Do it now – don’t wait.

The above scenario describes the first position secured bank debt, either traditional secured bank debt or SBA guaranteed debt, but always in a first position and thus in control of everything, including the business, its assets, the receivables equipment, inventory and the personal net worth of the owner/guarantor.

Everything is at risk. If the spouse has signed the loan, then the family home and his/her assets are also at risk. In a word, it’s “all in.”

After the first level of secured debt, there may be second levels of bank debt, such as lines of credit. These are very susceptible to workout; as we all know and understand unless the first priority gets paid, the second priority gets nothing.

The list grows:

  • Seller take-backs, second to the bank. Sometimes they are secured with sub-ordinate UCCs, but are still second priorities.
  • Landlord.
  • Vendors, with or without personal guaranties.
  • Tax obligations, including 941 payroll taxes unpaid and dangerous.
  • Credit card debt, whether personal or not, that are all a direct result of the business.
  • Mortgage debt on commercial buildings used for the business. 
  • Lawsuits, even with judgments pending.

If you see this train wreck coming, implement your debt workouts as soon as possible. You are wasting important resources and getting weaker every day. Do it now – don’t wait.