Steps To Avoid Defaulting On Your Business Loanby Radha Lakshmi Blogger
The 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.
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!
Created on Aug 8th 2019 14:28. Viewed 285 times.