If your small business is struggling due to insufficient capital and too much debt, you are not alone. Every year, thousands of small business owners in America find themselves in desperate financial situations. If you are struggling to meet your obligations as a business owner, consider looking into business debt relief options.

Like individuals, businesses can also have too much debt. 70% of all small businesses have unpaid debt. 17% of these have an outstanding debt of up to $25,000, while 21% of businesses have an outstanding debt of up to $100,000.  

To survive in this competitive environment, business owners not only have to become more frugal, but they also have to rely on a small business debt relief program. Before you give up and consider closing your business, consider all of the options discussed below.

What Is Business Debt Relief?

Business debt relief comes in the form of programs such as business debt settlement, consolidation loans, debt management programs, and more. These strategies can help you reduce the burden of debt by lowering your interest rate, reducing the amount you owe, and simplifying repayments.

For business owners, borrowing is important to support their expansion or to bolster their cash flow. Organizations like the Small Business Administration have loan programs for small businesses. Yet, many businesses borrow too much and may later find that their business does not have the capacity to make as much as they owe.

Once creditors are calling to collect, there are mainly two ways to deal with debt. You can either save your business and try to pay your outstanding debts or liquidate your business to pay off your debts.

“If your business has already closed, settling your outstanding debts is a great approach with minimal risk,” shares Teresa Dodson, a debt expert and the founder of Greenbacks Consulting. 

Fortunately, business debt help is available in many forms.

Three of the Best Business Debt Relief Programs To Get You Out of Debt

If your business has been struggling in the current market conditions like many others, you may be tempted to sell off your business to get a fresh start. Selling your business is a drastic step. Consider these small business debt relief options first.

Debt Consolidation

One way to make repayments easier is by consolidating all your business loans and credit cards into a single payment. This can reduce your monthly repayments without having a drastic impact on your credit.

With a business debt consolidation loan, you will only be dealing with a single lender instead of multiple. You can negotiate the new loan’s terms, lower your interest rates, and help you pay off all your existing loans. This new loan can be an unsecured loan, or it can be secured with your business assets to help you secure an even lower interest rate.

Debt Settlement

While there is a difference between business debt and consumer debt, you may still be eligible for a debt settlement program. All your existing business debts, such as business loans, lines of credit, and virtually every unsecured type of loan, can be eligible for settlement. If you have an SBA loan or microloan and are unable to pay the full amount, you can also submit an “offer in compromise” if you have ceased operations and liquidated your assets.

Compared to loan restructuring, debt settlement is gentler on your credit score. Your debt settlement company can negotiate with your creditors to reduce your loan amount balances. It is possible to reduce your debts by a significant amount and pay off your loans faster. Many business owners are able to settle their accounts in as little as 24 months.  

However, a key point about business debt is that this strategy tends only to work best when a company is already out of business. Otherwise, a consumer’s existing business may be harmed. For example, if you take on a business debt and try to settle it for an existing business, depending on the loans you have to repay, the lender can come in and seize assets.

In other situations, the lender may be more likely to sue the business, particularly if the consumer has a personal guarantee on their business loan, which means they can go after and sue the consumer personally. 

Furthermore, a current business often needs solid credit in order to continue operations. A construction and/or service business, for example, requires materials to either do their task or offer their services. If they have negative credit and are delinquent, business activities will be hampered or shut down.

Debt Management

A business debt management program begins with a review of your financial situation. A professional credit counselor can then develop a personalized budget to help you succeed.

Once you develop an action plan, your eligible debts will be enrolled in the program. A debt management company will also negotiate repayment terms with your lenders to reduce or eliminate fees, penalties, and interest charges. A monthly payment structure will be set up so you can begin paying off your debts.

Alternatives to Business Debt Relief Programs

Other than the business debt relief programs listed above, you can also consider the alternatives listed below to eliminate your debt.

Sell Your Business

Sometimes, you may want to sell your business to pay off all your lenders. A sale can provide you with the funds you need to pay off your loan balance and free you from any future obligations.

This process, however, is not always easy or straightforward. If your business has more debts than assets, it will be challenging to find a buyer. Even if you sell your business, you won’t be off the hook if you are personally liable for your business obligations. You will still need to pay off your debts in such a situation.

Liquidate Assets

Another option is to liquidate your business and distribute your assets. You may be able to negotiate with your lenders to settle your account for less than the full balance of your small business loans. Like selling your business, if you are personally liable for the debt, you may still have to pay off the debt unless your creditors free you from the obligation.


If you have exhausted all other options, bankruptcy may be the last resort option left for you. Chapter 11 and Chapter 13 are the two most common forms of bankruptcy available to business owners. These are debt reorganization methods that can have a serious impact on your credit report.

In the worst-case scenario, you may have to declare a Chapter 7 bankruptcy. The process involves turning over your business to a bankruptcy trustee. The trustee will then sell all your business assets to pay taxes owed and distribute the remaining funds to your creditors.

Bankruptcy is a complex and expensive process. You’ll need an experienced attorney for legal advice, but it can give you a clean break from your business. When your debt is worth more than your business assets, bankruptcy may help you reduce the debt burden.  

When To Look for Business Debt Relief?

Here’s when you should consider business debt resolution to pay off your outstanding loans:

  • Your business is not making enough to pay off your debt.
  • You are struggling to cover all your business expenses.
  • You have to put your personal funds into your business.
  • You are considering borrowing additional money to keep your business afloat.
  • You have outstanding bills and missed loan payments. 

One of the first things that business owners do when trying to manage their debt is take their personal money and put it into their business. This is a short-term tactic that may or may not work. Recognizing signs of financial distress is important because it can help you avoid falling deeper into the debt trap. 

How Do Debt Relief Companies Work?

Business debt relief companies can help you resolve your debt faster and avoid bankruptcy. Nonprofit and for-profit companies can take a look at your overall financial situation and help you choose the right strategy to pay off your loans. 

These companies build an action plan and negotiate with your lenders to lower your interest rates and the amount of money you owe and provide you with a clear path toward a debt-free life.  

Debt relief companies utilize a variety of strategies to help you achieve your financial goals, such as business debt settlement, debt management, consolidation, and counseling. An experienced and reputed company can also help you resolve your debt faster while paying less overall. The right program can help you save up to 50% on your debt before fees.

Compare All Business Debt Relief Options Available to You

Business owners have a lot of business debt relief options at their disposal. Business debt settlement, debt consolidation, debt management, and bankruptcy are only a few of these options. Compare all your options and check your eligibility before taking any steps that will affect the viability of your personal finances or business.