Vendor Debt – Unsecured Loan Settlements
Typically we focus on secured bank debt, SBA guaranteed loans, Merchant Cash Advance loans, because they are all secured by the assets and have a stranglehold on the business and backed up with personal guarantees. In short, the power of their secured position is quickly understood, and small business owners tend to work very hard to keep these commitments current for as long as possible.
The problem is that the side effect of this strategy frequently results in the unsecured vendors getting ignored and the debt to them piles up, as you can’t pay everyone.
Since unsecured debt has no collateral position and usually no personal guaranties, it’s easy for the business owner to slow down or stop paying unsecured vendors completely, and dedicate available cash to the secured obligations.
The very nature of the relationship between unsecured vendors and their client base supports them being lenient and allowing invoices to go unpaid form 30, 60, 90 days and even longer. They still deliver goods and services accepting slow payment, and building up large receivables until one day the debt it is too high, and the vendors begin to attack, ceasing services and products and suing.
Often small businesses will pay an additional amount on each invoice to keep the vendors happy, and still receive their goods and services, but this too will soon end as it is a further drain on an already challenged cash flow, and quickly becomes unsupportable.
Now the mountain of unsecured debt is too high to maintain, and the lawsuits begin mounting up, and the vendors have shut you off interfering with your business flow.
This is where we can give huge relief to our small business clients. While we are working out the secured debt through our powerful strategies, we can also eliminate the unsecured debt, removing the stress from the business and allowing us to focus on a workout of the secured debt. Even if sued, our strategies protect the business from collection efforts.
You are in survival mode, as distasteful as this reality may be, your obligation to your employees and business, and to yourself and your family, is paramount and takes priority. If you could pay them you would, but you can’t, and there is no sense in going down with the ship.
They are going to continue doing business with you despite their loss – it all works out for everyone.
Call us to discuss the details of this strategy. We can customize a strategy to meet your business needs as well as your debt workout requirements.