Business owners in Ohio may encounter unanticipated financial problems if they start a venture without a sizeable nest egg. It is not uncommon for business owners who encounter financial difficulties to be unable to keep up with scheduled payments. This may cause severe cash flow problems. If a small business owner is unable to settle debts, he or she may fall into the trap of a merchant cash advance that can cripple the business in no time at all.
The owner of a small business in another state explained the adverse impact such an advance had on her roofing business. Out of desperation, she applied for a merchant cash advance of $95,000, and it was approved almost immediately. However, $35,000 was deducted from that amount for fees and interest — at 41 percent — and she received only $60,000. Repayment started immediately, and she had to pay approximately $560 per day. Needless to say, this only exacerbated her problems; before long she took another cash advance, bringing her business debt to $130,000.
This business owner used her own retirement funds to pay wages and keep her company afloat, without any payment for herself. With professional help, she ultimately obtained a low-interest commercial loan that enabled her to save her business. Her advice to others is not to start a small business without a sizeable amount of money for emergencies.
The most appropriate step for a small business owner who is overwhelmed by debt is to consult with an experienced Ohio bankruptcy attorney. A lawyer can explain the manners in which the Bankruptcy Code protects business owners and suggest the best way forward — after assessing the client’s unique circumstances. With professional guidance, it may be possible to reorganize the business debt, and re-establish financial security.
Source: newsok.com, “Small-Business Owner’s New Mantra: Never Again“, Benjamin Pimentel, Sept. 16, 2016