Sometimes, businesses find themselves in huge debts that put their survival at risk. It may be from an investment that has turned out wrong or even from writing off bad debts from their clients. Their current revenue levels may not be sufficient to clear their loans.
Using a money lender
Money lenders in Singapore provide an effective avenue through which businesses can settle their debts. All that is required is to identify a licensed lender. There are such lenders that offer business loans to struggling businesses. Be sure to compare the lending rates and repayment periods allowed by different lenders before settling for the one that best suits the current financial situation of your business. You want a lender that charges a reasonable interest rate and will allow you to spread the repayment period over a number of months or years, depending on the borrowed amounts. It is also very important to ascertain that the lender you settle for is licensed. Otherwise, you may find your business in future tribulations in the event that the lender you have borrowed from is using the business to launder money.
Reducing operation costs
Even while still looking for possible lenders to borrow from, it is essential to reduce the operating costs of your business. That goes a long way in lowering the accumulation of debt. In the past, businesses have had to cut down on their scale of production. That is especially true for slow-moving products as they tend to hold up capital in the form of stock. There may also be a need to cut down on the number of staff for a given time in a bid to reduce the wage expenses of your business. Finally, you may consider reducing the size of your operating premises if they are only rented. By cutting down on such expenses, you are able to free up some money that may be used in settling some of your debts.
Liquidating assets and relinquishing ownership
If a business is unable to repay its debt, its lenders may go to court seeking to dissolve the business for purposes of recovering their money. Usually, the assets of a business are auctioned. They often end up being sold for a lower price than their actual value. That means that more assets end up being sold. However, a business may opt to sell the assets in advance to repay its lenders. This gives the business owner better control over the assets’ selling price. They may, therefore, end up selling only a few assets that leave them in a better position to get back to their level of operation.
As the worst-case scenario, a business may consider relinquishing its ownership to a potential investor that is willing to settle the debts of the business. The investor may demand to be given control over a certain number of shares as security for bailing the business out of its debt.
Whereas there are available solutions to business debts, it is vital for a business to update its books of accounts regularly. They act as an early indicator that a business may be incurring huge losses that may plunge it into debt.