Steps To Avoid Defaulting On Your Business Loan
by Radha Lakshmi BloggerThe question is, why one defaults a business loan? The reasons can
be varied. Though sometimes it can be just a result of miscalculation, in a
lion share of the other cases it is caused by declining sales, unforeseen
hardship or similar factors resulting in a struggle to repay debts. Defaulting
loan is a very unnerving feeling; it is likely to result in miserable
uneasiness when the debt collectors reach the door step for reminder and to
ensure if payments are being made timely without defaulting. The only con of
business loan as compared to the other loans making rounds in the markets is that
lender will consider selling your collateral assets in case of failed repay. However,
major risk lies on your assets.
How To Avoid
Defaulting on Your Business Loan?
Loan defaults
might have tons of depressing effects, but as the saying goes there’s a
solution for every problem, this situation is not an exception, too!
1. First of all, Talk to Your Lender:
To keep it all
transparent, dial up the lender’s number directly and let him/her know your current
situation. If you are unable to pay the business loan amount for a certain
period, make sure to give them a clear timeline as in by when you will be clearing
the debts with certainty. This will help you escape being termed as a defaulter
for a particular time.
2. Refinance:
There’s hardly
any business that has never faced short term debt. Calculating EMI using
business loan EMI calculator is a good option to plan it before hands to avoid
this. To fix the situation, having a macro view of the problem and trying to remove
all the small ones with a one-time heavy loan is a good idea. That’s a lot like
Debt consolidation. This, like any other products, has its own share of pros
and cons. So, checking the details before opting for your business loan is
highly recommended. While debt consolidation, don’t club your personal debts
with business ones.
3. Arrange Your Debts Priority Wise:
Undoubtedly a lot
of cash inflow and outflow would occur in the business but prioritizing the
transactions is very crucial. If there are some payments due by end of the
previous month and early the running month, it is best to clear the early dues
if you wish to obtain additional cash flow into the business. Else, prioritize the
expenses as per relevance and clear out accordingly. However, consider having
an open conversation with the involved lenders.
4. Reach out for legal assistance:
If you fail to
find any remedy against your defaulting business loan, it is recommended
that you seek legal assistance. No one can give you better guidance than a
lawyer to understand the issue and its root cause.
5. Reduce the costs:
The point to
remember is that a business is no magic and it takes time to earn success! If
you are aiming to expand your business within very little time, then that
probably is the culprit behind the defaults on your debts. Lead the business in
the traditional way and you will automatically cut down the cost and expenses as
are currently required.
Using the
aforementioned way, handle defaulting of business loan without breaking a
sweat!
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Created on Aug 8th 2019 14:28. Viewed 568 times.