If my credit’s frozen, I’m cooked!

The Importance of Liquid Credit

By Frances Rahaim, Ph.D.

aka "The Money Doctor"

That is what one small business owner told me earlier this week as we discussed the dilemma many small businesses run into when they incur debt while trying to stay afloat in difficult economic times.

Many, if not most, small business owners rely on liquid credit in order to purchase supplies, meet payroll, and ultimately survive during times of short-term financial difficulty. And many of those businesses face a unique problem when it comes to retiring their debt ahead of schedule.

Since debt-settlement and debt-negotiation programs nearly always freeze or harm credit, they aren’t usually an option for small business owners—or, really, anyone who requires fluid credit or who values a healthy credit score.

There seems to be a belief among small business owners that they can’t become debt-free because they are constantly using their credit lines. I believe this is a fallacy, and, in fact, a small business owner can develop a plan which addresses all of their debt in a cumulative, fully-automated way with the help of a professional counselor who can help keep them on track and eventually eliminate that red ink years ahead of schedule.

            I truly believe that many companies fail not because they took on debt to survive, but because they had no plan to manage it.

Most small business owners are so busy running their day-to-day operation, they have no time to consider developing a long-term debt strategy. We often hear of owners experiencing financial difficulties unchecked by their attorneys and accountants—two professions which, for the most part, don’t focus on long-term debt management.

Far too often, debt management can be the difference between the success and failure of small businesses. Repaying debt early can often translate into hundreds of thousands of dollars which can be used to grow the business more quickly, while improving the owner’s quality of life and even making it easier for them to plan for retirement—even if that retirement is years away.

But, more than anything, professional debt relief can be a huge stress reliever, allowing the owner to focus more on the prosperity of his or her business rather than the debt they believe is weighing it down.

In restaurant parlance, “If my credit’s frozen, I’m cooked!”

That is what one small business owner told me earlier this week.  We were discussing the dilemma many small businesses suffer when they incur debt in order to stay afloat during difficult economic times.

Many, if not most small business owners rely on liquid credit in order to purchase supplies, meet payroll, and ultimately survive during times of short-term financial difficulty.  Hence, small businesses face a unique problem when it comes to retiring their debt ahead of schedule.

Since debt-settlement, debt-negotiation programs nearly always freeze, or harm credit, these programs may not be an option for small business owners, or anyone who requires fluid credit, or who values a healthy credit score.

There seems to be an overwhelming opinion among small business owners, that they cannot become debt-free because they are constantly using their credit lines.  I mentioned that I believe this is a fallacy, and that is in fact a small business owner can develop a plan which considers all of their debt in a cumulative way, is fully automated, and have a professional counselor to help keep them on track, their existing debt, and even their future debt may be managed successfully so that they can be debt free years ahead of a traditional amortized schedule.

It is my belief that many companies fail not because they took on debt in order to survive, but rather because they had no plan methodically manage their debt.

Most small business owners are so pressed for time, and so busy running their businesses, that this sort of financial planning goes unchecked.  The most common report we hear is that the business owner is happy with their attorneys, and accountants, but that neither of these professions typically focuses on a long-term debt management plan.

This commonly overlooked area can be incredibly powerful, and often makes the difference between failure and success for small business owners, as paying off the debt often equates to hundreds of thousands of dollars saved which could then be used to grow the business further, for retirement purposes, or to improve the quality of life.

Best of all, having a professional to help you manage your debt can be a huge stress reliever, allowing you to be more productive, and focus on the prosperity of your business instead of the debt.

For more information about credit, debt, small business and other topics, visit http://www.powerdowndebt.com

For questions or comments, please email info@powerdowndebt.com