Due to the global slowdown of the economic, a lot of small businesses find themselves in a position with increasing burden of business debt, but with reducing income in the months to come.
The usual way to get rid of business debt in the United States for those small businesses is for them to file bankruptcy.
The filing of bankruptcy prevents the debtors from collecting business debts against those small businesses.
However, there is significant downside involving the filing of the bankruptcy.
Most of the small businesses are relying upon their reputations in the market to make money.
They have spent their time, effort and money in developing the business names as well as the goodwill associated therewith in the market to attract customers.
The filing of bankruptcy is a public record.
Such filing will hurt the image and the goodwill of the business, and will make the business very difficult to recover from the bankruptcy and continue on to attract more business in the market from the customers.
After the filing of bankruptcy, it will also be difficult for the business to have any credit from future vendors.
All the future vendors will request payment upfront from the business with bankruptcy filing in order for the vendors to sell products or services to the business.
This will hurt the cash-flow situation of the business significantly.
In order to avoid all these problems, but still get rid of the existing business debt, the small business can achieve the same goal through proper corporate re-structure.
Proper planning and execution of the corporate re-structure will be able to help small business to get rid of the existing business debt without go through the bankruptcy filing.
If you are a small business and struggle with the increasing business debt, please contact us for a free evaluation of the situation.