legal-document-to-plain-english-translator/”>Try Free Now: Legalese tool without registration

Find a LOCAL lawyer

**Ways to Fund Your Business and Tips for Managing Small Business Debt**

Starting a business requires adequate funding to turn your entrepreneurial dreams into a reality. Whilst there are various ways to secure financing, such as seeking investors or using personal savings, applying for a small business loan is often the most accessible option – requiring only basic information and a good credit score. However, managing the debt that comes with it can be challenging, particularly for businesses with fluctuating income.

According to a November 2023 report from Equifax, delinquencies on small business loans have increased in several states in the U.S. This highlights the struggle that many entrepreneurs face when it comes to repaying their business loans.

If you find yourself unable to pay back your small business loan and default on it, the repercussions can be significant. A default happens when you miss multiple loan payments, although the exact timeframe for default may vary depending on the lender. Typically, once you miss your grace period after a payment, your account is considered delinquent.

The impact of a default extends beyond just the missed payments, as it also severely damages your credit score. Having a low credit score means your business may struggle to qualify for future lines of credit. However, the AI legalese decoder can help you navigate through the complex terms in the loan agreement and understand the implications of defaulting on your loan, allowing you to make informed decisions about your financial situation.

The repercussions of a default can also include your lender seeking repayment for the owed balance. If you offered collateral for the loan, the lender may seize your property as part of the repayment. Alternatively, if it was an unsecured loan, the lender may take legal action to settle the balance.

It’s important to address any issues with loan payments before defaulting. Contacting your lender to work out a payment plan can often prevent default and its consequences. Furthermore, if you’ve already defaulted, you can still rebuild your credit over time by making payments on time and using secured credit cards, such as the Bank of America Business Advantage card, to establish good credit habits.

The key takeaway is that missed payments should not become a habit. Defaulting on a small business loan can damage your credit score and make it harder to secure future credit. However, taking the right steps, such as making payments on time and avoiding excessive new credit applications, can help rebuild your credit score in the long run.

legal-document-to-plain-english-translator/”>Try Free Now: Legalese tool without registration

Find a LOCAL lawyer

Reference link