For businesses in serious debt, Chapter 11 bankruptcy may be the best solution, but many business owners have other options. The federal Small Business Administration provides several loan programs that help troubled businesses get out of debt, so that they can operate in better financial health moving forward.
One example is America’s Recovery Capital Loans, or ARC loans. These loans are available to any business that has been open for at least two years, and turned a profit in at least one year of operation. The business must also show that it’s cost of doing business has risen at least 20 percent, or that its sales have fallen by 20 percent. The business must produce a business plan that includes cash flow projections for the next two years.
ARC loans are worth up to $35,000, and are designed to help with debts like credit card bills, according to the Houston Chronicle.
Another option is to negotiate with creditors to get some of the debt forgiven, come up with a manageable payment plan, and so on. The U.S. Cooperative Extension System provides credit counseling to small businesses. These services are offered through each state’s land-grant universities, which in New York State include Cornell and State University of New York at Buffalo. Cooperative Extension services cannot provide loans or grants, but can still help your business save money and get out of debt.
If neither of these options make sense for your situation, Chapter 7 or Chapter 11 bankruptcy may be able to help. A conversation with a bankruptcy attorney can help you sort through your options.