Business Debt Restructuring

Business debt restructuring is an action taken to significantly modify the debt load of a company that is facing financial pressure. A company can further help their financial situation by reducing other company operating costs such as payroll or selling off unneeded supplies or equipment. The main goal of business debt restructuring is to turn a business from cash-flow negative to cash-flow positive.

Many times, the words refinancing and restructuring are used synonomously, but they are actually not the same thing. Refinancing is a possible option for a company that is not in or facing a financial crisis. Maybe it makes sense because they can get a better rate by refinancing. Restructuring, though, is a more viable option for a company that is in, or facing, a financial crisis. A company in this position probably won’t have any refinancing options available, so getting their current lenders to work with them to restructure their debt is many times the best, most cost-saving option.

Is Business Debt Restructuring Right for Me?

Once you know what type of situations the restructuring of business debt is designed for, knowing whether or not it’s right for your situation is pretty simple to determine. But, if you want to know with all certainty, you can ask yourself the following questions. If you answer yes to all of them, you are definitely a candidate for a business debt restructuring program.

• Are you business debts unsecured?
• Are you in, or facing, a serious financial crisis if you don’t lower your debt liability?
• Do you need more relief than a refinance would likely offer?
• Can you become cash-flow positive if you were to get a significant modification of your business debt payment, payment schedule and interest rate?

 If you answered yes to all of the above questions, you a definitely a candidate for a restructuring program. If you answered yes to most of them, there is still a good likelyhood that you are a candidate. The best way to know for sure is to talk to a business debt restructuring specialist. A restructuring specialist can determine whether or not your situation, as well as your debts, qualify for such a program.

What Else Can I do Besides Restructuring Business Debt?

As we mentioned briefly above, a business can also take other cost-saving or cash producing actions to better their financial situation. The most effective actions are typically going to be saving business expendatures any where you can. This can include downsizing, payroll cuts, reducing, or eliminating, certain perks temporarily or any where a business can cut costs. It can also include selling unneeded assets such as materials or equipment that is not needed.

Anything you bring in from such cost saving or cash producing actions can then be applied to paying down the debt that you have restructured. The extra cash-flow can also be used to start building up a surplus or emergency fund to help avoid a future financial crisis.