Small Business Debt Relief

Many small businesses carry debt as part of their growth strategy. In fact, around 70% of small companies carry some level of debt, totaling trillions of dollars nationally creditsuite.com. While debt can help finance expansion or operations, it can become overwhelming if revenues dip or costs rise. If you’re struggling to manage business debt, help is available – you don’t have to face it alone.

Business debt often spikes after unexpected events. For example, during the COVID-19 pandemic many businesses took out federal disaster loans (the SBA’s EIDL program provided over $380 billion fedsmallbusiness.org) and other aid. Those loans must be repaid, adding to monthly obligations. A recent survey found that large debts are common: 39% of firms now owe more than $100,000 fedsmallbusiness.org. High debt levels can even make it harder to get new credit or loans. With this in mind, the first step is to get a clear picture of your debt and finances. List each debt (bank loans, lines of credit, credit cards, vendor payables, etc.), note interest rates and due dates, and compare that to your regular cash flow.

• Review Your Finances: Start by creating a detailed budget or cash-flow forecast. Include all business income and expenses, and see how much cash is left to service debt each month. Adjust for expected changes (seasonal swings, new contracts, or declines in sales).

• Prioritize Debts: Pay high-interest obligations first. Consider negotiating with creditors for lower rates or extended terms. Lenders often prefer to get paid on a longer schedule than risk default. If possible, pay at least the minimums on all debts to avoid penalties. If you must choose, never skip paying payroll or essential operating expenses – as one banking expert notes, “if you have to decide who to pay first – lender versus vendors – that is the sign to contact the bank and have an honest conversation” - digital.akbizmag.com.

• Negotiate with Creditors: Talk openly with banks, suppliers, or credit card companies. Many small-business creditors offer hardship programs or may agree to temporarily lower payments. Be prepared to explain your situation and propose a feasible payment plan.

Beyond managing day-to-day cash flow, you can also explore external assistance and restructuring options:

• Refinance and Consolidate: The U.S. Small Business Administration (SBA) can be a resource. The SBA guarantees loans up to $5.5 million for small businesses, which can be used for working capital or refinancing existing debt sba.gov. For instance, an SBA 7(a) loan can pay off other higher-interest obligations. Under SBA programs you might secure a lower interest rate or extend the loan term, reducing your monthly burden. In fact, SBA loans can even be used specifically to refinance business debt sba.gov. Smaller loans or lines of credit may be available too. Check with banks or SBA lenders about refinancing options.

• Government Programs: Look into any available disaster relief or recovery loans. For example, states may have COVID-19 recovery grants, SBA Economic Injury Disaster Loans (EIDL) if a natural disaster applied to your area, or industry-specific aid. These programs can offer more affordable financing to pay down burdensome debt.

• Business Counseling: You don’t have to figure this out on your own. The SBA partners with local resource centers that offer free business advice. Small Business Development Centers (SBDCs) and SCORE mentors provide expert counseling on finance and budgeting sba.gov. They can help you build a plan to manage debt and run your business more efficiently. Nonprofit credit counseling services also exist: for example, the National Foundation for Credit Counseling (NFCC) connects business owners with certified counselors to create a debt action plan nfcc.org. These services can guide you through options like negotiating with creditors or optimizing cash flow.

Whatever path you choose, remember that help is available. At Better Future Finance, our senior financial consultants specialize in working with business owners in tough financial spots. We can review your situation and suggest tailored strategies – whether that’s negotiating terms with lenders or restructuring loans. Being proactive and getting advice early can make a big difference.

Take action today: Don’t wait for the debt to overwhelm you. Speak with a professional who understands business finances. Apply now for a consultation with a senior financial consultant at bff.betterfuturefinance.com or schedule a call with one of our debt consultants at betterfuturefinance.com/meet-your-bff. Let Better Future Finance help you create a clear plan to regain control of your business’s financial future.

When business owners borrow money, one of the biggest questions is: “Am I personally on the hook if my business can’t pay?” The answer depends on how the loan was structured, the type of business entity you run, and whether you signed a personal guarantee. Understanding this distinction can protect both your company and your personal assets.

Business Structure and Liability

If you operate as a sole proprietor or general partnership, you and your business are legally the same. Any debt taken out for the business is also your personal debt. Creditors can go after your personal bank accounts, wages, or even property to satisfy unpaid loans. This is why many entrepreneurs choose to form corporations (C-Corps or S-Corps) or limited liability companies (LLCs). These entities create a legal separation between the business and its owners, so in theory, only the business is responsible for its debts.

However, even with an LLC or corporation, lenders often require owners to sign a personal guarantee for loans. A personal guarantee is a contract where you promise to repay the loan personally if your business cannot. Banks do this to reduce their risk, especially for small or newer businesses. If you signed one, then yes, you are personally liable, regardless of your entity type. It’s important to carefully review any loan documents before signing to see if a personal guarantee is included.

Types of Business Loans and Risk

Not all loans carry the same rules. For example, SBA loans almost always require personal guarantees, especially for owners holding 20% or more of the business. Lines of credit and traditional bank loans often carry the same condition. On the other hand, vendor credit lines or certain equipment financing deals may be limited to the business itself, depending on the contract.

Secured loans are another area to watch. If you used personal property as collateral — such as your home or personal savings — the lender can seize those assets in case of default. Even if your business is structured as a corporation, collateral tied to you personally bypasses that protection.

How Lenders Pursue Collection

If a business defaults, creditors typically try to collect from the company first. If the company is insolvent or closes, they may then enforce any personal guarantees. This could mean lawsuits, judgments, or even wage garnishment. It’s a risk that surprises some business owners who assumed their LLC status alone provided total protection.

How to Limit Personal Exposure

There are strategies to reduce personal liability:

• Negotiate Guarantees: Sometimes you can negotiate a “limited guarantee,” which caps your personal responsibility to a portion of the loan.

• Separate Finances: Always keep business and personal finances completely separate. Using personal credit cards or accounts for business expenses can blur liability lines.

• Maintain Strong Records: Transparent accounting makes it easier to show which debts truly belong to the business.

If you already face personal liability for business loans, you’re not alone. Many owners carry this burden, especially after the pandemic and economic downturns. It doesn’t mean your financial future is ruined — but it does mean you need a plan.

Better Future Finance can help. Our consultants work with business owners to review loan contracts, understand liability, and find debt relief solutions that protect both your company and your personal life. Whether that’s negotiating with lenders or restructuring obligations, we’ll help you take control. Apply for a consultation at bff.betterfuturefinance.com or schedule a call at betterfuturefinance.com/meet-your-bff today.

Every business experiences financial ups and downs. When cash flow becomes tight and debt payments feel overwhelming, restructuring debt can be a lifeline. Restructuring means renegotiating the terms of your loans or obligations to make them more manageable, giving your business room to stabilize and grow.

What Debt Restructuring Involves

Debt restructuring can take several forms. It may mean lowering your monthly payments by extending the repayment term, reducing the interest rate, or even negotiating partial forgiveness of the debt. Unlike refinancing, which replaces old debt with a new loan, restructuring often works directly with existing lenders to modify the original agreements. This is particularly common when lenders see that a business is struggling but still viable. From their perspective, receiving partial or slower repayment is better than forcing a business into bankruptcy where they may recover little or nothing.

Signs It’s Time to Restructure

If you’re using credit cards to cover payroll or falling behind on vendor invoices, it’s time to act. Other warning signs include:

• Constantly juggling which bills to pay first.

• Using personal savings to cover business expenses.

• Facing threats of lawsuits or collection actions.

• Declining sales with debt balances that stay the same or grow.

Waiting too long can limit your options. Lenders are more willing to negotiate before you default completely.

How the Process Works

Step one is a thorough review of your finances. This includes listing all debts, assets, and cash flow. Step two is approaching lenders with a clear proposal. For example, you might ask to reduce interest from 15% to 7% in exchange for extending repayment by two years. Or you might request a temporary payment holiday until revenue stabilizes. Vendors and suppliers may also agree to longer payment terms if it means keeping your business.

In some cases, multiple debts can be consolidated and then restructured into one affordable monthly plan. This approach not only simplifies payments but may also stop collection actions. Professional advisors, like those at Better Future Finance, can step in to negotiate on your behalf, presenting your business as cooperative and committed to repayment while pushing for more favorable terms.

The Benefits of Restructuring

Successful restructuring can immediately reduce financial pressure. Lower payments free up cash flow to invest back into the business — whether that’s marketing, equipment, or hiring. It can also improve relationships with creditors, showing them that you’re proactive and committed to finding solutions. Over time, a restructured plan can help you pay off debts in a sustainable way, keeping your business alive and positioned for future growth.

Things to Watch Out For

Be cautious of predatory offers promising instant fixes. Some lenders may offer “rescue” loans at extremely high rates, which can worsen the situation. Always review terms carefully. Also, restructuring may have tax implications if part of a debt is forgiven — another reason to seek professional guidance.

Debt restructuring isn’t about failure; it’s about adaptation. Many strong businesses have gone through restructuring during hard times and emerged healthier. The key is addressing the problem early and approaching it strategically.

If your business is weighed down by unmanageable debt, Better Future Finance is here to help. Our consultants specialize in working with small business owners to restructure debts, negotiate with creditors, and create payment plans that keep businesses running. Don’t wait for collections or lawsuits — take action now. Visit bff.betterfuturefinance.com or schedule a consultation at betterfuturefinance.com/meet-your-bff to start restructuring your debt and rebuilding your business’s financial health.